FFP program once again the star of QF financials.

[medhead]

I would imagine each points provider buys points from QFF as does QF itself as you accrue, and QF has set redemption rates to get those points back for flights and upgrades that would be similar to the codeshare rates for partners, for upgrades they are a special rate since its QF only.

QF are doing some inter-company accounting (not sure its trickery at all, probably very similar to codeshare accounting with JQ) but the majority of the QFF profit is coming from the credit cards as alluded to by the results brief.

sorry, accounting trickery is my name for inter company payments and such. The thing is that the FFP is the one providing the points so the airline side must be paying the FFP for any points awarded. Then when the points are redeemed the FFP pays the airline entity for the seat. (in general) Basically transferring profit from the airline to the FFP. Hence "trickery" to make the FFP look valuable. I think I might have answered my other question that Qantas will look to sell off the FFP, otherwise the FFP would be internalised. (maybe the separation was a Dixon thing and they will bring in back in?)

This is the point l was trying to make. Sorry if l was a little bit wrong with the wording Medhead.
More and more people with points will be redeeming them in the future (as you now have more ways of earning points compared to say 5 or 10 years ago). Award tickets or people applying for upgrades (even Int travel Red eDeal tickets can be upgraded when there is a sale on) more often. Pooling points with family members, CC earns and flights in general, there is an ever increasing way of earning points now days. But only 3 ways of spending them; upgrades, award tickets or the Frequent Flyer Store. I am an example; l applied for a "Westpac Earth Gold" last year and have put about 30k through it, which l hadn't done previously. So, l have 50k extra points in my account (some were AMEX earing, $1:1.5point) that l can spend any way l wish but will be redeeming the points for flights.

So, combine the earning of points side plus the huge growth in the number of people in the Frequent Flyer Program, it could be a bottle neck in the future. Ontop of that, IMO, you will also see QF diminish the number of Classic Awards available and try to "funnel" people into using ASA's. With the high cost of ASA's (generally) and more people battling for a "Classic Award" seat, it will be harder to get an award flight for a decent price.

How QF define in their balance sheet the ASA's or total number of points and put a value on it (or otherwise), l have no idea.

I don't really see it as being that bad. The store has exceedingly poor value and Qantas seems to push people towards buying from the store. Lots of those new frequent shoppers are likely to get stuff from the store and not flights. So only time will tell how that pans out. In terms of reduced classic awards I don't think that is of benefit while the FFP remains owned by Qantas. If they sold off the FFP that is when it is of real benefit to reduce the number of classic awards, or to change the price (to the FFP) of the redeemed flights.

I think I was convinced that while international red-e-deals during sales say they can be upgraded in some case they are still in an non-upgradable fare class.

 

[markis10]

I think I might have answered my other question that Qantas will look to sell off the FFP, otherwise the FFP would be internalised. (maybe the separation was a Dixon thing and they will bring in back in?).

They separated it with a view to selling it off the same time ASA's were introduced, the GFC intervened to put that on hold. At that stage (July 08) the were seeing 3M seats redeemed on the classic awards per year.

 

[medhead]

They separated it with a view to selling it off the same time ASA's were introduced, the GFC intervened to put that on old. At that stage (July 08) the were seeing 3M seats redeemed on the classic awards per year.

Not only the GFC but the massive rejection of Dixon's plans. But I'm trying to gauge whether selling is part of the long terms plan still. (and I guess it is)

 

[markis10]

Not only the GFC but the massive rejection of Dixon's plans. But I'm trying to gauge whether selling is part of the long terms plan still. (and I guess it is)

The masisve rejection of Dixons plans in terms of the sell off to private equity happened a year before the frequent flyer sell off was announced.

In terms of how the points are accounted for, there is some more info here:

http://www.qantas.com.au/infodetail/about/investors/investors-briefing-1jun2010.pdf

Post Jan 2009 points have a value for purchase and redemption.


Joyce announced that the IPO was now off the cards in Nov 2009 at a press club function in Canberra.

 

[cove]

Thanks Markis10.
I had never read that announcement.
$2 billion cash equals WOW

 

[medhead]

Yes thanks. Very informative.

I note
Caltex/Woolworths Fuel to be launched in 1H FY11, and
"Record member satisfaction"

 

[samh004]

Yes thanks. Very informative.

I note
Caltex/Woolworths Fuel to be launched in 1H FY11, and
"Record member satisfaction"

What does that mean, points from fuel?

 

[markis10]

What does that mean, points from fuel?

It would appear to say that fuel will earn points shortly.