"Congratulations you have achieved the maximum amount of Loyalty bonuses" Umm, Thanks

[simongr]

Re: "Congratulations you have achieved the maximum amount of Loyalty bonuses" Umm, Th

But that $59 million would be accrued over a large number of years. Also that discounts the value earned from selling flights to those same people. If in your example 10% of those people switched half their flights to QF from DJ because they got the loyalty bonus it would far outweigh the liability for the bonus.

 

[AnonymousCoward]

Re: "Congratulations you have achieved the maximum amount of Loyalty bonuses" Umm, Th

But that $59 million would be accrued over a large number of years.

I'm not sure how that's relevant. Liability is a stock (a point in time value), not a flow. So the rate of accumulation isn't really that important: what's important is how much there is.

THat said, the hit to profitablity each year probably does have an impact. Say it took 10 years to accumulate that $60m liability - I don't think QF's in a position to be "giving away" $6m in profit a year - it's not ExxonMobile.

Also that discounts the value earned from selling flights to those same people. If in your example 10% of those people switched half their flights to QF from DJ because they got the loyalty bonus it would far outweigh the liability for the bonus.

I doubt it. If flying planes has such a slim margin as the WSJ article posted the other day, then most of these people are marginally profitable at best, and giving them extra points to redeem for vouchers might make them unprofitable.

 

[simongr]

Re: "Congratulations you have achieved the maximum amount of Loyalty bonuses" Umm, Th

Companies are generally measured on their P&L rather than their balance sheet. Given qF are cash rich to the tune of 3BN a $59M liability is irrelevant (and probably wouldn't even be material from an audit point of view). And $6M expense line might not be material either.

Although you can argue the low profitability of airlines you might also need to consider that a seat that is flown that would otherwise go unsold is almost 100% profit (given fixed costs the only real variables are food and drink consumed on board and the marginal amount of additional fuel).

 

[thewinchester]

Re: "Congratulations you have achieved the maximum amount of Loyalty bonuses" Umm, Th

simongr has pretty much hit the nail on the head, not more needs to be added to it; save for two points:

1. QFF contributes significantly to QF Group EBIT (earnings before interest & tax), to the tune of AUD 342m in FY 10/11 (increase of AUD 14m from FY 09/10) on billings of AUD 1.042 billion. (NB: Billings inc. the points purchased by partners & credit card companies)
2. That scenario AUD 59m figure of AnonymousCoward's as said by simongr is built up and spread out over time, and wouldn't be called upon all at once.

And while checking those figures in 1), it also highlighted something else I didn't know; which was QFF purchasing Wishlist during the aforementioned financial year. For those who don't know Wishlist, they are an online gifts company which has been operating since 98/99, who in more recent years spread their wings into corporate loyalty and reward programs. Their background, market base, procurement, gift card management, and dispatch/warehouse infrastructure & experience alone is a perfect fit for QFF; as it allows them to perform all this in-house and reduce costs by not outsourcing such work to outside fulfilment companies such as Carlson Wagonlit et al.

 

[JohnK]

Re: "Congratulations you have achieved the maximum amount of Loyalty bonuses" Umm, Th

QF enhancement. SC count also resets each year.
Medhead did a table in another thread. He can put it up when he comes back.

Not everyone is disadvantaged by the "enhancements". In fact I would hazard a guess and say most Platinums would actually benefit from the "enhancements".

For a high stakes Platinum the worse off scenario starts to come in at 2705 SCs. Anything short of that and in theory you a are winner although there will be cases where people will miss some loyalty bonus such as those earning 900 SCs a year.

For someone like me who tries to earn as close as possible to 1200 SCs then I am better off under the current system as I am guaranteed 16,000 QFF points where as before it would have been either 10,000 QFF points or 15,000 QFF points.

If you are someone who earns 2100 SCs a year then under the new system you will earn 32,000 QFF points where as the old system it would have been either 20,000 QFF points or 25,000 QFF points.

 

[bigjobs]

Re: "Congratulations you have achieved the maximum amount of Loyalty bonuses" Umm, Th

It wouldn't be so bad if Platinum One actually offered something that (even vaguely) qualified as a "benefit".

the main benefit of WP1 is the extra inches you get.

 

[Oneworldplus2]

Re: "Congratulations you have achieved the maximum amount of Loyalty bonuses" Umm, Th

John, my beef is the resetting of the SC loyalty bonus each year, not the amount of points when you get from the loyalty bonus.

Last year when the changeover happened, l lost some ~300SC's and this year l'm about 90SC's away from my second loyalty bonus, which l will loose and have to start from scratch.

 

[TonyHancock]

Re: "Congratulations you have achieved the maximum amount of Loyalty bonuses" Umm, Th

The actual impact of points loss for those that go way past the 2000SC mark needs to also be weighed against the gain many will have had in this year following the reset. Under the old system I would have racked up 55000 loyalty bonus points, but have actually received 72000. (Original earning under the old scheme and the 4 8000 point loyalty bonuses since the reset.) My year ends July 31.

I'm pretty much aware of my travel for 2012/13 and and will effectively not really have lost out until my 2013/2014 year. (I estimate, under the old system, my 2012/13 earning would be 45000)

I know it is only a delay of the inevitable and my 2011/12 year has been a one of bonus....but you have to take what you can get!!

 

[JohnK]

Re: "Congratulations you have achieved the maximum amount of Loyalty bonuses" Umm, Th

John, my beef is the resetting of the SC loyalty bonus each year, not the amount of points when you get from the loyalty bonus.

Last year when the changeover happened, l lost some ~300SC's and this year l'm about 90SC's away from my second loyalty bonus, which l will loose and have to start from scratch.

Yes I do not necessarily agree with the Loyalty SCs resetting each membership year either. Perhaps they could have left this alone for higher tiers but then you are creating prejudice and Qantas does not like to do this. Do they?

This is the second "enhancement" though to Loyalty in the past few years and I still miss Upgrade Credits as I only ever accrued 1 and used it on a short haul flight before it expired. I would have potentially accrued another 22-23 Upgrade credits since which would have come in very handy on some flights.

The Loyalty bonus QFF points have not in any way made up for the loss of Upgrade Credits but this latest "Enhancement" has left me better off.