My Personal Valuation of Qantas FF and Velocity Points

[MEL_Traveller]

Though valuing flights at the price that airlines charge - be it average prices, or individual prices for business and first class - is the only way of objectively and quantitatively doing it,since that is what market segments will bear (though I'm not in those market segments).

it's possibly a bit more complex than that... I have seen some people 'value' their award bookings at $30,000 (or more!) based on individual retail prices per sector... but that ignores that they could have bought a round-the-world fare, ratail, for $9000 through any travel agent. so the saving is $9000, not $30k.

Others might value a Bangkok-Hong Kong fare in business class at $2000 flying Cathay Pacific, but ignore that you could fly on Emirates for the same route for just $600 return (in business).

 

[Deleted member]

I suppose as the old song goes. Like Happiness It's different things to different people.

 

[ozbeachbabe]

I don't use any specific formulae to calculate the worth of a point as like people have suggested above, it's all subjective as it depends on whether you just value the sector on a published J sector fare vs best available J class fare for that sector on a particular airline re Mel_Traveller's post.

If you're not a person that would generally pay to travel in J but would like to, then it may be prudent to use points for J awards or for for points upgrades on the economy tickets you purchase. In that instance you can't really say "we saved $4K" when you were never going to buy J fares anyway but what you did do (buy using points to travel in a premium cabin) was get to travel J for less than what you could buy a J retail fare for.

Like GPH alluded to - different strokes for different folks, it's all about perception and if it's a good deal to you then it's worth it. It doesn't mean there's not a better deal but all you can compare it to is what you'd paid previously and what you know.

Case in point, on a TG flight BKK/BNE in J last year we overheard a fellow pax in J who was rather chuffed he'd paid about AUD1,500.00 for his one way fare which in his opinion was a good deal. Maybe it was if comparing that amount to half of what a much higher return fare in J ex Australia would have been.

We were on one of eight sectors of a US DM 30K freq flyer award ticket in J that was GUM UA NRT NH PEK TG BKK TG BNE BR TPE BR CTS NH NGO UA GUM, the points having being bought during a 100% bonus buy off when the AUD was almost parity with the USD.

Of course we didn't say anything to this guy as we didn't want to rain on his parade however to us, AUD1,500.00 seemed outrageously expensive for one single sector because we were comparing his situation to ours which was probably as good as you were able to get at the time. RIP to US Air being in Star Alliance.

 

[Renato1]

it's possibly a bit more complex than that... I have seen some people 'value' their award bookings at $30,000 (or more!) based on individual retail prices per sector... but that ignores that they could have bought a round-the-world fare, ratail, for $9000 through any travel agent. so the saving is $9000, not $30k.

Others might value a Bangkok-Hong Kong fare in business class at $2000 flying Cathay Pacific, but ignore that you could fly on Emirates for the same route for just $600 return (in business).

You are correct, of course - I was mainly thinking domestic travel with points, and ignoring Tiger Air and Jetstar.

I must say - you are giving me interesting ideas for tarvelling around Asia, thanks.
Cheers,
Renato

 

[Renato1]

I don't use any specific formulae to calculate the worth of a point as like people have suggested above, it's all subjective as it depends on whether you just value the sector on a published J sector fare vs best available J class fare for that sector on a particular airline re Mel_Traveller's post.

If you're not a person that would generally pay to travel in J but would like to, then it may be prudent to use points for J awards or for for points upgrades on the economy tickets you purchase. In that instance you can't really say "we saved $4K" when you were never going to buy J fares anyway but what you did do (buy using points to travel in a premium cabin) was get to travel J for less than what you could buy a J retail fare for.

Like GPH alluded to - different strokes for different folks, it's all about perception and if it's a good deal to you then it's worth it. It doesn't mean there's not a better deal but all you can compare it to is what you'd paid previously and what you know.

Case in point, on a TG flight BKK/BNE in J last year we overheard a fellow pax in J who was rather chuffed he'd paid about AUD1,500.00 for his one way fare which in his opinion was a good deal. Maybe it was if comparing that amount to half of what a much higher return fare in J ex Australia would have been.

We were on one of eight sectors of a US DM 30K freq flyer award ticket in J that was GUM UA NRT NH PEK TG BKK TG BNE BR TPE BR CTS NH NGO UA GUM, the points having being bought during a 100% bonus buy off when the AUD was almost parity with the USD.

Of course we didn't say anything to this guy as we didn't want to rain on his parade however to us, AUD1,500.00 seemed outrageously expensive for one single sector because we were comparing his situation to ours which was probably as good as you were able to get at the time. RIP to US Air being in Star Alliance.

Thanks for those examples.

True it is indeed about perception.
And as we have seen, perceptions vary greatly depending depending on what one personally values.

Thus for me and several others here, when we go grocery shopping with a 3 point-per-dollar Amex Platinum Edge card, we are getting either a 3% or 4.8% bonus on our spending (depending on whether it's Qantas domestic or Virgin domestic) whereas others would see it as a 10% or 15% bonus on spending (depending on Business/First Class, international/domestic) .
Of course, then there are others who see grocery shopping at the major chains as anathema - either going more for the cheaper stuff at Aldis, or the more natural and/or more expensive at butchers, fruit stores, natural health foodstuff stores etc where the Amex cards aren't accepted - so the valuation is fairly moot, regardless of how they fly.
Regards,
Renato

 

[JohnK]

I suppose as the old song goes. Like Happiness It's different things to different people.

Different strokes for different folks?

Obviously the higher the number the better it makes people feel.

 

[serfty]

So far this calendar year we've flown/booked 2,170,000 QFFP worth of flights ... hate to think what that would have cost in $ ...

So you spent maybe $7k-$13K in +++ with those redemptions or were they all upgrades?

 

[amaroo]

So you spent maybe $7k-$13K in +++ with those redemptions or were they all upgrades?

For the trips this year we've coughed up $8,120 in related fees. This got us in a "pp" sense 6 x return trips to UK/Europe, 1 x return trip to Asia with 5 x domestic trips bookended to some of the international flights. In terms of sectors it's;

International
10 x F
16 x J
Domestic
5 x J

These are a mix of MASA and classic awards. In terms of my personal valuation* on a per point basis - I get a value of 3.75c for the MASA and 2.5c for classic inclusive of all $ fees and point/bonus earn.

* when calculating the value one needs to take into account some of these award flights delivered OWE status for two people for the next 21 months.

 

[Renato1]

For the trips this year we've coughed up $8,120 in related fees. This got us in a "pp" sense 6 x return trips to UK/Europe, 1 x return trip to Asia with 5 x domestic trips bookended to some of the international flights. In terms of sectors it's;

International
10 x F
16 x J
Domestic
5 x J

These are a mix of MASA and classic awards. In terms of my personal valuation* on a per point basis - I get a value of 3.75c for the MASA and 2.5c for classic inclusive of all $ fees and point/bonus earn.

* when calculating the value one needs to take into account some of these award flights delivered OWE status for two people for the next 21 months.

Do you live close to an airport?
Cheers,
Renato

 

[ozbeachbabe]

Do you live close to an airport?
Cheers,
Renato

I think he does however that airport does not serve the airlines that he predominantly travels on.

 

[amaroo]

Do you live close to an airport?
Cheers,
Renato

Nah, too noisy for me

 

[aliens]

Look at using airBnB instead of booking hotels can get fantastic places/deals Whole apartment in Amsterdam for 140 euros. Then have a kitchen to cook if you wish

My experience has been the opposite. I would book four or five months before flying there and got some fantastic deals. On my last trip I decided to not fly to capitols but to drive there instead. And I used Booking.com to book one or two days in advance. What I'd saved on plane fares I more than lost in high hotel fees. So for this next trip I'm still driving but booked the hotels six or seven months in advance - and they were all far cheaper than what I'd been forced to pay on my last driving trip. Unfortunately, I lose flexibility - if we really like a place, we often can't stay there longer as I'm booked to be somewhere else.

I've also taken advantage of very inexpensive hotel fares in Croatia after mid September. They seem to drop quite a bit after the bulk of Germans go home, leaving German pensioners hanging around. My most expensive booking is at 50 Euros a night.
Cheers,
Renato

 

[justin23]

I've been trying to come to grips with the valuation of Qantas FF points and Virgin Velocity points. For example, when I go to a service station which earns 2 points a dollar on my Amex card, but where there is a 2.25% surcharge - do I pay the surcharge or do I pull out another card which earns 0.5 points per dollar, with no surcharge?

...snip...

So, when at the petrol station, if I was getting 2 Qantas points per dollar, that's 2% extra value - so I wouldn't use the Amex card with the 2.25% surcharge. But if I was getting two Velocity points per dollar, for me that's 3.2% extra value, and I could pay the surcharge and still be ahead.

I don't think your maths there works out. 2 points per dollar is almost 200% extra value....

Someone may have answered this already in the discussion, but there are earn rates to consider as much as burn rates. As you allude if you can earn the same number of Velocity and QFF points then clearly you only need to look at what you can get for your points that suit you.

But if you look at say $50 worth of petrol at a service station.
On an Amex card with surcharge of 2.25% = $51.25 for 100 points therefore each point cost you 51.25 cents
On a card that has no surcharge and 0.5 points/$ = $50 for 25 points therefore each point cost you $2
On a card that has no surcharge and 1 point/$ = $50 for 50 points therefore each point cost you $1

So we take that and look at redemption. lets say taxes are equal or close enough. I know its not, but you'd need to make a good spreadsheet to work it out!

The Virgin flight is worth 10,000 points and the same flight is 16,000 points on qantas (this is to offset the difference in value. Again you need to calculate it more accurately but I'm using an example to show you why the surcharge isn't an issue).

So a Virgin 10,000 point flight on a 1point/$ card will cost you $10,000 in credit card transactions.
A Qantas 16,000 point flight on a 2point/$ card with a 2.25% surcharge will cost you $8200 in credit card transactions

See the difference here. This is also why i was less concerned about tax differences. You'd need to pay $1800 in taxes extra on the Qantas flight to make the Virgin flight cheaper. This is looking at getting a comparable service also. For all intents and purposes there is little difference in a Qantas and Virgin domestic economy flight. So what they charge for it and the value of the points don't need to be compared. Its the actual cost of earning those points which really matters.

Comparing the value of the points across airlines isn't a useful tool especially when it may caost you more to get the more highly valued points. You need to look at what you want from you points (This even applies to toasters!) and how much it would cost you to get those points. Maximizing the points value is a different tool although useful when you have a lot of points to spend.

I hope this has all made sense!!

 

[burmans]

But if you look at say $50 worth of petrol at a service station.
On an Amex card with surcharge of 2.25% = $51.25 for 100 points therefore each point cost you 51.25 cents
On a card that has no surcharge and 0.5 points/$ = $50 for 25 points therefore each point cost you $2
On a card that has no surcharge and 1 point/$ = $50 for 50 points therefore each point cost you $1

Talk about maths being wrong. I dont buy petrol to get points, I first and foremost look for the best price to buy petrol. The points are just a bonus (and yes I try and maximise that bonus)

So for me
On an Amex card with surcharge of 2.25% = $1.25 for 100 points therefore each point cost you 1.25 cents
On a card that has no surcharge and 0.5 points/$ = $0 for 25 points therefore each point cost you 0
On a card that has no surcharge and 1 point/$ = $0 for 50 points therefore each point cost you 0

 

[melkin]

My benchmark is One World round world business class which I book progressively as legs open up . It costs me 300,000 points (by the time I do a few additions and changes as legs become available). Because of the difficulty and compromises in booking it compared to buying a cash ticket I value it at "only" $5000 (well say 6,000 less fees) so I value a point at about 1.67cents.

While I need to book this 11 month in advance it's not a disaster to have to cancel. 5000 points. An $83 option fee....

If I use points for anything else I weigh it against that benchmark. Recently I've use points for
Cathay business from HK to Europe or HK to US east coast (Chicago or NY). We fly Sydney-HK economy for cash. Daytime Cathay economy is OK in same timezone. stop over in HK which we like. Long haul Business in Cathay usually stacks up well against my benchmark and it's much easier to book.

 

[justin23]

Talk about maths being wrong. I dont buy petrol to get points, I first and foremost look for the best price to buy petrol. The points are just a bonus (and yes I try and maximise that bonus)

So for me
On an Amex card with surcharge of 2.25% = $1.25 for 100 points therefore each point cost you 1.25 cents
On a card that has no surcharge and 0.5 points/$ = $0 for 25 points therefore each point cost you 0
On a card that has no surcharge and 1 point/$ = $0 for 50 points therefore each point cost you 0

That really doesn't make sense. You are spending money therefore the points have a cost value, they are not free, because if you don't spend money you don't get the points. It also doesn't have to be petrol it is any spend on a credit card.

So say your annual spend is fixed to a maximum of $10k.

Then on a card with the 2.25% fee for 2 pts/$ then you'd spend $9779.95 on goods + the 2.25% fee =$10,000. But that $10,000 earns you 19559 points.
On a no fee 1pt/$ card you spend $10,000 and get 10,000 points.

Also not all places charge for using an AMEX. So if you are willing to spend $220.05 less in general and put them into fees you'll get far more points. If you were told a $200 spend would nab 10,000 pts people would be all over that promotion. Also it means for example I could upgrade 2 short domestic Y flights to business class. That $220.05 wouldn't go close to getting me 1 business class flight paid for normally instead of a Y fare.

I have an AMEX and a Woolworths card. I don't tend to use my AMEX because its only a 1pt/$ card. But at 2pts/$ I'd use it and absorb the fees. However everyone is different and I'm trying to highlight the fact its not a simple thing that works for all people. You need to do the maths and work out whats important to you when deciding if its value or not. You have a different viewpoint on how the points are valued, which I don't agree with so your valuation will be different.

 

[mark4217]

Woolworths, Coles, Bunnings don't charge a fee for Amex, do they??

 

[There'sOnlyOneJimmy]

That really doesn't make sense. You are spending money therefore the points have a cost value, they are not free, because if you don't spend money you don't get the points. It also doesn't have to be petrol it is any spend on a credit card.
--- snip

I think the point that Burmans is making is that we ought to separate the decision 'what will I buy' from 'how will I pay for it'.
Many of the purchases we make regularly, like petrol, we would make whether points earning opportunities existed or not. We buy the petrol because we need it, not because the transaction can earn us points (please no responses about whether we *need* petrol, or whether there are better alternatives, or whether we should walk or take public transport, etc. - petrol here is just something commonly used as an example of a necessity...)
The question of points aquisition, and any associated costs of acquisition, only arises when considering 'how will I pay'.
If cash, then no points, no (additional) cost.
If card, then you can weigh up any additional costs associated with that tender type versus any additional points earned by using it.
The point is, that for a purchase of a product/service that you were going to buy anyway (i.e. independantly of any opportunity to earn points by way of tender type), the amount paid for the product/service doesn't form part of the cost of earning any points. Only any *additional* costs you incur to aquire the points (e.g. surcharge) are relevant.

 

[burmans]

You are spending money therefore the points have a cost value, they are not free, because if you don't spend money you don't get the points. It also doesn't have to be petrol it is any spend on a credit card.

Yes I agree I have to spend the money but I am spending it to get the petrol (or other goods). In your calculation as below you are suggesting the only reason you are spendiong is to get the points

But if you look at say $50 worth of petrol at a service station.
On an Amex card with surcharge of 2.25% = $51.25 for 100 points therefore each point cost you 51.25 cents

For me the very first principle of credit card use is dont buy anything you wouldnt buy anyway. So I am suggesting that of the $51.25 you are spending $50 on petrol and $1.25 on points. Whereas you are suggesting you are spending $51.25 on points and the petrol is free. Now I havent done a poll but I doubt many people would agree with this second valuation.

If this valuation is true I'm more than happy to let you use your cerdit card to fill up my tank which you whould have no problem with given you regard petrol as free.

 

[ablecookie]

My benchmark is One World round world business class which I book progressively as legs open up . It costs me 300,000 points (by the time I do a few additions and changes as legs become available). Because of the difficulty and compromises in booking it compared to buying a cash ticket I value it at "only" $5000 (well say 6,000 less fees) so I value a point at about 1.67cents.

While I need to book this 11 month in advance it's not a disaster to have to cancel. 5000 points. An $83 option fee....

If I use points for anything else I weigh it against that benchmark. Recently I've use points for
Cathay business from HK to Europe or HK to US east coast (Chicago or NY). We fly Sydney-HK economy for cash. Daytime Cathay economy is OK in same timezone. stop over in HK which we like. Long haul Business in Cathay usually stacks up well against my benchmark and it's much easier to book.

You are one of the few using points for RTW flights. Definitely the best value.

In my case, booked pair of J tickets for a total of 560k points for PER-HKG-BKK-NRT-YVR-JFK-GIG-MAD-TLS-WAW-DOH-PER and paid a total of $1575 cash.

NB TLS-WAW by train.

Only downfall is had to travel on **** airline such as AA on one leg!