Heads up about program changes

[SeatBackForward]

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...

Its the consequential benefit of being part of an alliance. Now they will lose those 4 flights, and any other flights that said member may have taken with QF. If its an attempt to get those OW hoppers onto QF flights, its an interesting "punishment" based approach.

To me realistically, as I've said earlier in this thread, its a big fat "f you" to Oneworld

 

[Jetett]

Is there anyone in a position to be able to update the status run thread with what will happen with new changes? I'm one of the conceptually challenged when it comes to status runs I'm afraid ..

 

[AnonymousCoward]

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

And they've spoken.

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..

No other airline offers this, and yet other airlines still have passengers.
QF also had passengers before they offered mASAs.
So, I guess they figure that they'll be alright.

But, if you think there's a lot of money to be made in keeping the offering, why not buy a bunch of QF shares, and then tell management what they should be doing? Surely you can't be so arrogant to think that you're the /only person/ in the world that's capable of thinking of strategies to run an airline?
Some of these other people run huge funds, with lots of available, investable, cash. Yet, none of those guys are lining up to gobble up QF and have it change to a model that offers more benefits to people who bring in little revenue. Why do you think this is?

 

[Jean Prouvaire]

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.

I think the point isn't so much that the revenue is recognised twice.

It's that the revenue is recognised at the time the points are sold (and certainly their cashflow is positively impacted at that point), with an attendant liability incurred, but that Qantas has flexibility in how much it costs them to redeem those points, thereby allowing them to maximise their profits. Ie, they can clear 100,000 points at a cost of $600 or at a cost of $1,000, by changing the redemption rate for instance. If they clear them at $600 then they make an extra $400 profit.

 

[SQ421]

Overused? Openly advertising their overuse?

Why does that matter? I doubt Qantas needs to look at the "advertised overuse" to ascertain exactly how many people were using the mASAs and under what circumstances (DSC offerings / what time during the qualification year / what routings / at what cost). Its really no different to the "advertised' F Lounge runs, which is another thing some people have rather strong views about. If Qantas offers a product and customers use the product Qantas can hardly blame the customers because the usage is more than what Qantas anticipated. I imagine Qantas hires some rather well paid data and financial modellers to work it all out for them.

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.

Wouldn't blame NAN runs disappearing solely on their discussion in these forums either. The whole game is a movable feast and customers can hardly be blamed for maximising the bang for their buck (or points!) through every avenue available to them. Nor would I blame the airline for wanting to try and do the opposite.

 

[markis10]

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.

Qantas recognises the revenue when points are sold and also when points are redeemed or expire.

 

[blackcat20]

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.

No, I dont think its "abuse". They offered a product, I used it. Yes we did post in the spreadsheet, yep did a trip report. So what? QF made a lot more money off me (in cash and points) than if I hadn't decided to go on a day trip. No I wouldn't have bothered as a classic, because I want the status credits. The same reason I pay for a plus bundle on JQ. I'm still going somehwere I want to go, I'm just paying extra for status credits which mean I'm more likely to fly QF in the long run.

 

[SeatBackForward]

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.

What you wrote was this:

(you can only make money once - either when you sell, or when the pax redeems - not both times)

What I answered demonstrated that they make money twice, on both sides of the transaction and they can do so at an y rate they set themselves. What you're talking about is the accounting procedure of when that profit is recorded.

 

[thommo50]

Not at all Pu. But it is a 'frequent flyer program'. Now it is a 'frequent spender program'

Correct but its also fairer now for people that spend on QF flights. Which suits me

 

[burmans]

What I answered demonstrated that they make money twice, on both sides of the transaction and they can do so at an y rate they set themselves. What you're talking about is the accounting procedure of when that profit is recorded.

I think what markis10 posted shows this better than any ongoing discusssion!

 

[SeatBackForward]

And they've spoken.



No other airline offers this, and yet other airlines still have passengers.
QF also had passengers before they offered mASAs.
So, I guess they figure that they'll be alright.

So are the mASA's repsonsible for increasing passengers or reducing them? the above lines seem contradictory.

But, if you think there's a lot of money to be made in keeping the offering, why not buy a bunch of QF shares, and then tell management what they should be doing? Surely you can't be so arrogant to think that you're the /only person/ in the world that's capable of thinking of strategies to run an airline?

I wouldn't wish it on anyone. I have enough strategies on other high risk games at play. But we can all agree, that QF's current woes are primarily management related decisions. So if the management team there now are the ones capable of running QF, we'll be in trouble if amateurs like me show up.

Some of these other people run huge funds, with lots of available, investable, cash. Yet, none of those guys are lining up to gobble up QF and have it change to a model that offers more benefits to people who bring in little revenue. Why do you think this is?

*But* the QFF progamme DOES bring in revenue. The most profitable side of the business! now you want to disenfranchise them too?

 

[AnonymousCoward]

Qantas recognises the revenue when points are sold and also when points are redeemed or expire.

There are two distinct operations - the same cash can't be recognised twice.

The first is their estimated gross profit (one portion of the cash), and the second is the revenue for unencumbering cash (and corresponding cost of delivering the actual redemption) - this part may or may not actually deliver any profit. Theoretically, if QF has budgeted correctly, there'd be no profit in this part at all.

 

[AnonymousCoward]

So are the mASA's repsonsible for increasing passengers or reducing them? the above lines seem contradictory.

mASAs are responsible for more *unprofitable* passenger miles flown.

*But* the QFF progamme DOES bring in revenue. The most profitable side of the business! now you want to disenfranchise them too?

No - QF wants to make more money (or loss less money).

 

[MelUser]

I'm not pleased with changes directed at other OW airlines - Before changes I had booked J fares on QR from Aus to Europe expecting proper paid QF level status credits.

Now they (Status Credits) have been reduced to very small amounts - quite ridiculous really given the distance flown and (paid) cabin.

 

[JohnK]

No, I dont think its "abuse". They offered a product, I used it. Yes we did post in the spreadsheet, yep did a trip report. So what? QF made a lot more money off me (in cash and points) than if I hadn't decided to go on a day trip. No I wouldn't have bothered as a classic, because I want the status credits. The same reason I pay for a plus bundle on JQ. I'm still going somehwere I want to go, I'm just paying extra for status credits which mean I'm more likely to fly QF in the long run.

You were still going to go MEL-HBA via CBR and SYD?

It does not matter what I think. Earning SCs on Any seat awards is gone. There are a few perfect examples in this thread alone why they are gone. Qantas was clearly losing money and not just from the status side of things. I think serfty posted earlier he booked AKL-LAX via MEL in business for 168,000 QFF points and at the same time earned 52,000 QFF points in the process. Considering a Classic award should be ~192,000 QFF points the few $ extra outlaid does not make up for it.

If you now still want status on QF/VA then you are going to have to pay for it.

 

[Jean Prouvaire]

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.

Correct, and it's an aspect of the equation I've deliberately ignored because I didn't want to lengthen my already lengthy posts.

The long-term malleability of even short-term fixed costs is why, for instance, it's not a good idea to give all your customers lounge access for instance. But as long as there is spare capacity (and I acknowledge there've been complaints about overcrowding in the lounges) it's preferable to sweat those assets over a larger customer base because of the incremental cost/incremental revenue equation that comes into play in the short-medium term.

The example I've used elsewhere is priority boarding at the first-class check-in counters. Restricting these counters only to first class passengers would be counter-productive (no pun intended) as the FF&E and people staffing those counters would be underutilised. Opening them up to Platinum members flying Economy helps work those assets more efficiently (and reduces the need to buy non-first class counters, thereby saving Qantas money). Opening them up to everyone on the other hand would defeat the point of premium product/service differentiation altogether.

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. [...] 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?

The people providing the service are no doubt better informed of the facts and figures than 99.99% of the people reading these forums, including myself. (Or at least some are. For instance, I doubt that the person drafting the media release had a comprehensive accounting understanding of Qantas's financial situation. They might have just been told "the reason for cutting the MASAs is that they're losing money, so say that.")

But it doesn't mean that they don't represent and spin these facts and figures in their favour. (The old "Lies, damned lies and spreadsheets" argument.) And it certainly doesn't mean they always make the right strategic decisions in response to these facts and figures. So for instance, it's very easy for something that was seen as an investment by one regime to be seen as a cost by another. The truth isn't always easy to discern.

 

[harvyk]

*But* the QFF progamme DOES bring in revenue. The most profitable side of the business! now you want to disenfranchise them too?

I strongly suspect QFF is profitable for two reasons,

1. They sell points for non-QF purchases. The carrot with this is that you can book "free" OS flights, with LHR or LAX often being the destination which is totted out as where you could go, of course very few people who earn points solely through shopping ever spend enough to actually buy a reward flight. You'd need to purchase nearly $50,000 worth of groceries to get a truly free (so not even taxes) return flight from SYD to MEL for two people.

2. The majority of people with QF points are unsure of exactly how to use them. I know of people sitting on 400K balances who feel that the points are worthless and as such don't use them.

 

[SeatBackForward]

mASAs are responsible for more *unprofitable* passenger miles flown.

Unless QF are running flights where the majority are ASA redeemed seats, I don't see how this works.

A plane with 300pax capacity is a fixed cost, if they have 200 paid passengers, you're suggesting that the points revenue brought in by an extra two passengers, is unprofitable? Granted, there is marginal cost for two more passengers, but surely their points revenue covers this, and more!

Unless QF's flights are majority occupied by ASA redeemed passengers (which they aren't), or QF is giving away seats for free, I don't see how such passengers are unprofitable.

No - QF wants to make more money (or loss less money).

Srsly you must be a troll.

 

[drron]

How did you guess? Qantas have it at 749 miles exactly!

We were nearly right.Great Circle Mapper has the BKK-KUL distance at 754 miles.MH(who we are flying) has it at 759 miles but QF has it at 748-really feel doubly ripped off by QF.

 

[legroom]

You were still going to go MEL-HBA via CBR and SYD?

It does not matter what I think. Earning SCs on Any seat awards is gone. There are a few perfect examples in this thread alone why they are gone. Qantas was clearly losing money and not just from the status side of things. I think serfty posted earlier he booked AKL-LAX via MEL in business for 168,000 QFF points and at the same time earned 52,000 QFF points in the process. Considering a Classic award should be ~192,000 QFF points the few $ extra outlaid does not make up for it.

If you now still want status on QF/VA then you are going to have to pay more for it.

JohnK

You had left out one word, I think

Flexible PE !

Flexible Business !

See the table I posted a few pages up where every J/F trip is now earning less SCs - except one (3501-3600 miles) ??