Heads up about program changes

[BD1959]

Where was my invite!

There was an open invitation over Christmas/New Year ... I take it you don't read your emails?? Ne'er mind, you can still read about it here.

Regards,

BD

 

[scheps]

Qantas is the only airline in the world that allows SCs earn on Any Seat awards.

When you do BNE-MEL-PER-KTA and return 2 days in a row on a Double SCs offer you are only using it for status? How about ADL-PER-TSV return with a TSV-BNE-DRW return nested in there?

And then go and create a spreadsheet on a public forum to constantly brag and gloat about your achievements?

Now Qantas is stating that Any Seat awards are not profitable. So people are going to take their points to another airline that does not offer earning on awards. Why not stay with Qantas? Classic awards not good enough?

As someone else mentioned Qantas is not going to lose anything by removing SCs earning Any Seat awards. And those that are leaving don't let the door hit you on the way out.

I agree the brag and gloat was not a great idea.

In my experience, Classic awards are so point expensive and the co payment is extremely high.

But i have to say, for me, the QFF value lies in last minute seat release on classic. Especially one way travels.

 

[SQ421]

You don't think these were abused? Did you post to the spreadsheet when you booked the Hobart Express? Did you do a trip report? Would you have bothered doing the Hobart Express on a Classic award?

I think short-cut is a perfect term for them.

Far be it for me to cry about the mASA's disappearing (exactly 90 of my 3100 Status Credits earned in the last 16 months have come from Any Seat Awards); but I don't see the need to begrudge those that did get their status via the Marginal Any Seat Awards (or those that earned Double Status Credits on those marginal awards!).

It was a product offered by Qantas, in all its (perhaps questionable?) wisdom. The punters used it best to their advantage. Same with the TT price beat F Lounge runs. If the customer is able to stitch together a set of product offerings by the Qantas Group to their advantage, why begrudge the customers?

I further don't get the derision towards those earning status "via short cuts". The person still had to earn 1400 Status Credits to earn the Platinum Status. What "short cuts" did they take other than intelligently using the available products to their best advantage?

 

[Princess Fiona]

I think we all need to chill. This thread is veering very off-topic. The purpose of the thread is discussion of the changes to the QFF programme. I cannot see the value of continually debating the value of MASA's and the people who flew on them.
QFF has made substantial changes to the program which are far more wide reaching for the average FF than ability to earn points and SC on cheap Any Seat Awards IMHO

 

[amaroo]

In my experience, Classic awards are so point expensive and the co payment is extremely high.

But i have to say, for me, the QFF value lies in last minute seat release on classic. Especially one way travels.

I concur with this. They are not as cheap as they once were - just like everything else in Australia.

 

[legroom]

I find this table on FT quite helpful.

It shows the reduction in benefits flying J / F with QF as far as SCs are concerned.

Only one zone (3501 - 3600 miles) receives an increase.

Who keeps saying that the pointy end will benefit ?

BTW, I cannot vouch for its accuracy as I have not double checked.





EDIT: it was kindly pointed out to me that this table refers to OW earning, not QF. My apologies

 

[JohnK]

It would be naïve if not a little arrogant for an airline whether it's QF or anyone else to think that customers will stay because it's too difficult to start again at the bottom with a rival airline.

Some people wouldn't even need a VA status match to get lounge access immediately courtesy of the recent EY status match or if they have an Amex Platinum charge card & if they don't have either of the above VA's generous family pooling scheme will get them there without too much effort.

Most people in the real world would not care.

Most people in the real world would not know you can status match to Etihad and fly Virgin domestically with lounge access.

 

[AnonymousCoward]

You don't think these were abused? Did you post to the spreadsheet when you booked the Hobart Express? Did you do a trip report? Would you have bothered doing the Hobart Express on a Classic award?

I think short-cut is a perfect term for them.

Abuse, is probably too strong a word.

People used these in ways (or in quantities, or both) that QF now figures it can't afford. I don't think it was "abuse" (which has malicious overtones), but rather "pushing the boundaries" that make the proposition unaffordable to QF.

Whilst it's disappointing that mASAs are going away, I don't think it's surprising.

 

[SeatBackForward]

OK - lay it out to me, like I'm stupid - how does this work day-to-day for QANTAS?

Qantas sells the right to give points away to partners, or, sets the rate they are earnt at themselves. QF will charge partners, lets say 1c per point. The partner then has to factor that into the cost of their goods and services.

But then Qantas also decide what rate you can redeem points, so they can say for instance, every point is worth 0.1c, ie you need 1000pts to redeem $1 worth of goods or services.

There's 1000% profit there itself. FF points are a quasi currency, without any of the regulation and control that actual currencies must behave to.

 

[SeatBackForward]

Abuse, is probably too strong a word.

People used these in ways (or in quantities, or both) that QF now figures it can't afford. I don't think it was "abuse" (which has malicious overtones), but rather "pushing the boundaries" that make the proposition unaffordable to QF.

Whilst it's disappointing that mASAs are going away, I don't think it's surprising.

Its no less abuse than it would be to, say, go to a store running a 50% discount on an item and wiping the shelves clean of that item. If it was so unprofitable, the bean counters would never have allowed it in the first place, and if there's one thing we all agree on, its that they are running the show at QF.

 

[AnonymousCoward]

Its no less abuse than it would be to, say, go to a store running a 50% discount on an item and wiping the shelves clean of that item. If it was so unprofitable, the bean counters would never have allowed it in the first place, and if there's one thing we all agree on, its that they are running the show at QF.

The beancounters would have made *some assumptions* about take-up rates, how much profitable business it would drive, as well as operated under certain other general assumptions about overall profitability of the business, which would be subsidising the mASA caper.

Now, those assumptions turned out to be wrong, or the overall business is so bad, that it's no longer financially feasible.

Which is hardly surprising - no other airline offers mASAs- which speaks to the financial attractiveness of the product.

 

[medhead]

I guess QF are taking the view that the only ASA pricing that works (for them) is what you get when booking a standard ASA online.

Technically what is available to book online is not an ASA.

 

[Colster]

If anyone from VA loyalty is hanging around this thread and laughing,
i for one will gladly jump ship for a status match now.

So, after digesting and reading deeper into the changes and all, I am going to continue with QFF. Anything that I can do to keep the red roo flying, I shall. And to be frank, the points are less important to me than the status, and the employment of Australians on an Australian Airline.

 

[JohnK]

The one thing that really puzzles me in all this: if Status is such a burden for QF, why have they been handing out DSCs like candy for the past 12 months or so?

I don't know the answer but if I had to guess Qantas has been trying to keep people away from Virgin by dangling the status carrot in front of them?

 

[harvyk]

Whilst at first my reaction was "oh no", and I don't like the fact that the minimum points guarantee is going down (since being CBR based, I used that a lot), and I don't like the fact that the points earn has gone down. But some of the changes, such as a reduction of the SC's earned flying partner airlines actually sits quite well with me.

Call it jealousy if you like, but I really didn't like seeing some ppl able to do a couple of quick hops on other OW airlines, and only step foot on QF to get the 4 ~ and get WP, whilst I always fly QF (unless it's a route which QF doesn't fly, I don't even look at other airlines websites), and yet struggle to get beyond PS...

Just my 2c...

 

[Jean Prouvaire]

Except that they have to provide an actual service for those points, which costs money.

Except that the incremental cost of providing those services is small whereas the incremental revenue is large, as has been discussed earlier in the thread. Qantas's fixed costs are high and sunk (cost of planes, lounges) whereas the marginal costs of providing perks to higher-status travelers (priority boarding, seat allocation and check-in, lounge and business class food & drink) are zero or low.

Two exceptions might be increased baggage allowance which, if utilised, would lead to higher fuel costs; and also increased accumulation of points, ie liabilities, for higher-tier customers. My gut feel is that not many people would take advantage of the increased baggage allowances (which, in any case, were cut way down a few months ago).

As for increased liabilities...

I think QF would rather just have a liability (that potentially just goes away by itself, if the points are allowed to expire)

I suspect one of the issues that Qantas have identified is that the liabilities aren't going away fast enough for their taste. The programme design actually makes it quite difficult for unused points to expire by themselves, which is great for customers, but would make the accountants nervous. Accountants usually prefer vouchers with a clear expiry date so that unused vouchers can be cleared off the liabilities on that date and therefore recognised as profit. QFFP points on the other hand are like voucher without an expiry date (except the asterix that clears them for no activity after 18 months), so the liability could potentially exist on their books for forever.

One of the consequences of the latest changes is that liabilities growth will slow for the long tail of customers who fly rarely and mostly fly discount economy. They could have achieved the same effect by letting unused points expire after X years on a FIFO (first-in-first-out) basis, but I'm guessing they figured that would have gone down even worse than the current changes from a PR perspective.

Interestingly, the latest changes might actually speed up liabilities growth for the higher-value customers, but then, the changes are clearly geared towards retaining that premium end of their customer base (no doubt as a result of competition from Virgin in the domestic business sector and overseas airlines in the international sector).

I'm not sure if the new tables will encourage businesses or rich travelers to spend (even) more money with Qantas on higher-priced fares, but seeing those QFF points tick over even more quickly for the fares they're buying now anyway might lead to greater lock-in, ie a "golden handcuffs" effect where one is reluctant to move to another programme where you don't have hundreds of thousands of points sitting in the bank.

To me all these changes appear to be part of an overall mindset of (a) profitability via cutting costs rather than increasing revenues and (b) protecting market share rather than growing market share.

Ironically, in my case, the double status credits and marginal ASAs were both initiatives that made me spend much more with Qantas than I ordinarily would. In other words, they were very effective as a revenue-increasing, market-share-expanding technique.

I flew Qantas even when they were up to 50% more expensive than competitors. I sometimes traveled in business whereas I ordinarily would have flown Economy. I did status runs where I flew extra legs at additional cost just to get the extra SCs. (eg SYD-MEL-PER-BNE-SYD instead of SYD-PER-SYD.) Were the DSCs and MASAs a short-cut to Platinum for me? Sure. I wouldn't have reached WP if not for them. But they were a shortcut that generated thousands of dollars in revenues and only cost them hundreds of dollars at most. What did this really cost Qantas except make them thousands of dollars in profit?

You can only claim that these incentives were "costing" Qantas profit if you (a) either assume that I would have made those same purchasing decisions, booked the same flights at the same higher prices, without them, which is definitely false in my case or (b) assume that I was taking away a seat from a full-fare paying customer which, given the low yields associated with their "65% market share at any cost" strategy is also false.

 

[SeatBackForward]

The beancounters would have made *some assumptions* about take-up rates, how much profitable business it would drive, as well as operated under certain other general assumptions about overall profitability of the business, which would be subsidising the mASA caper.

Now, those assumptions turned out to be wrong, or the overall business is so bad, that it's no longer financially feasible.

And thats why the bean counters get paid the big bucks..

Which is hardly surprising - no other airline offers mASAs- which speaks to the financial attractiveness of the product.

So the problem goes from not having enough items on the shelf to meed demand (or more accurately having other things with no discounting, and not what is in demand), to being not having enough customers in your shop at all..

 

[AnonymousCoward]

Qantas sells the right to give points away to partners, or, sets the rate they are earnt at themselves. QF will charge partners, lets say 1c per point. The partner then has to factor that into the cost of their goods and services.

But then Qantas also decide what rate you can redeem points, so they can say for instance, every point is worth 0.1c, ie you need 1000pts to redeem $1 worth of goods or services.

There's 1000% profit there itself. FF points are a quasi currency, without any of the regulation and control that actual currencies must behave to.

None of the above points out a "major flaw" in my previous post.

QF FFP might be a quasi-currency, however QF still needs to adhere to Australian accounting standards. You can either recognise the revenue when you first sell the points, or when the resulting cash becomes unencumbered (i.e. there's no "unearned revenue" liability), but you can't recognise the same money twice. QF is no more capable of "making money out of thin air" than any other business.

 

[JohnK]

Abuse, is probably too strong a word.

You are probably right.

Overused? Openly advertising their overuse?

We all saw what happened to the NAN runs. Now it would appear Qantas has targetted cheap ways to get status and in their haste they have disadvantaged those who do use Oneworld partners to get to destinations that Qantas does not serve.

 

[AnonymousCoward]

Except that the incremental cost of providing those services is small whereas the incremental revenue is large, as has been discussed earlier in the thread. Qantas's fixed costs are high and sunk (cost of planes, lounges) whereas the marginal costs of providing perks to higher-status travelers (priority boarding, seat allocation and check-in, lounge and business class food & drink) are zero or low.

They are fixed and sunk *in the short term*. In the long term, all costs are flexible. It costs money to build the next version of an IT system. It costs money to buy the next plane. It costs money to rent and outfit a particularly sized lounge.

All this banging on about how profitable these fares are flies directly in the face of what the people actually providing the service are saying.
It also flies in the face of what *every other airline* in the world is doing.

Yet, somehow, without access to the actual books, any statistical data, or even any experience running an airline, this forum's in a position to state that QF's cutting off a profitable venture? Surely the reverse conclusion - that you're wrong - is far more likely?