Qantas FF earns high Ancillary Revenue New Report by Cartrawlers

[kangarooflyer88]

An interesting report was just released from market research firm Idea Works Company which investigated ancillary revenue made by airlines globally. For those unaware ancillary revenue means revenue generated for services aside from that base ticket purchase. For instance, seat selection or baggage fees are classic examples of such sources of ancillary revenue. Ancillary revenue is the bread and butter of so called low cost carriers (LCCs) like Spirit Airways or EasyJet who charge a low base fee to lure passengers into booking the flight with them (i.e. LHR to Europe for £10 one way is not uncommon) but then charge for literally anything else you could want such as carry on bags, seat selection, drinks and meals, etc.

Although the report provides a fascinating look at airline revenues and how they performed and recovered before/during/after the pandemic, there are a couple of gems in this report that I think are very pertinent to Qantas specifically. In particular, Table 5 of the report investigates how much ancillary revenue airlines make on a per passenger basis, and could you believe it Qantas is number 2, just behind the legendary luxury leisure provider Jet2:


There were also a couple of gems reported about their frequent flyer program, namely that QFF is amongst the top frequent flyer programs in the world in terms of revenue generated. In particular, their frequent flyer program generates the most revenue on a per passenger basis, which suggests that Qantas could benefit in expanding eligibility to join QFF to people outside Australia. Note: I know people on this forum will rightly say that you can join QFF anywhere in the world. Whilst that is absolutely true, I would challenge them to tell me how one could actually earn QFF points if you are not based in Oceania, particularly from shopping activities.


Some more data points from the report related to QFF that might be worthy of discussion:

• 6% of QFF members hold elite status with the airline (likely substantially smaller than anyone on this forum would predict)
• Last year 66% of members accrued miles from flying (with it being the top category for accrual) whereas credit cards, financial services and insurance only accounting for 44% of members and 44% of members accruing points through loyalty partners (i.e. EveryDayRewards)

-RooFlyer88

 

[sudoer]

6% of QFF members hold elite status with the airline (likely substantially smaller than anyone on this forum would predict)

Not so surprising - the majority of Australians have signed up for QFF at one point - there will be many inactive/dormant members in there. Probably many deceased that QF haven't been informed about also.

If 6% of all members hold status, then it must be a substantially higher % of active flyers

 

[justinbrett]

An interesting report was just released from market research firm Idea Works Company which investigated ancillary revenue made by airlines globally. For those unaware ancillary revenue means revenue generated for services aside from that base ticket purchase. For instance, seat selection or baggage fees are classic examples of such sources of ancillary revenue. Ancillary revenue is the bread and butter of so called low cost carriers (LCCs) like Spirit Airways or EasyJet who charge a low base fee to lure passengers into booking the flight with them (i.e. LHR to Europe for £10 one way is not uncommon) but then charge for literally anything else you could want such as carry on bags, seat selection, drinks and meals, etc.

Although the report provides a fascinating look at airline revenues and how they performed and recovered before/during/after the pandemic, there are a couple of gems in this report that I think are very pertinent to Qantas specifically. In particular, Table 5 of the report investigates how much ancillary revenue airlines make on a per passenger basis, and could you believe it Qantas is number 2, just behind the legendary luxury leisure provider Jet2:
View attachment 351771

There were also a couple of gems reported about their frequent flyer program, namely that QFF is amongst the top frequent flyer programs in the world in terms of revenue generated. In particular, their frequent flyer program generates the most revenue on a per passenger basis, which suggests that Qantas could benefit in expanding eligibility to join QFF to people outside Australia. Note: I know people on this forum will rightly say that you can join QFF anywhere in the world. Whilst that is absolutely true, I would challenge them to tell me how one could actually earn QFF points if you are not based in Oceania, particularly from shopping activities.
View attachment 351772

Some more data points from the report related to QFF that might be worthy of discussion:

• 6% of QFF members hold elite status with the airline (likely substantially smaller than anyone on this forum would predict)
• Last year 66% of members accrued miles from flying (with it being the top category for accrual) whereas credit cards, financial services and insurance only accounting for 44% of members and 44% of members accruing points through loyalty partners (i.e. EveryDayRewards)

-RooFlyer88

Your post title is very misleading - it says right there in black and white that the Qantas FF program is the ancillary revenue it's counting (>80%), not LCC-style onboard ancillary revenue.

 

[Gold Member]

These metrics are hardly surprising for Qantas. But then when you’ve got government backing and influence across the country, its not that difficult.

Qantas has indeed chosen to slop up a LCC experience in the pursuit of more and more profits. This fact was never up for debate, or misleading.

 

[MEL_Traveller]

Your post title is very misleading - it says right there in black and white that the Qantas FF program is the ancillary revenue it's counting (>80%), not LCC-style onboard ancillary revenue.

Agree.

$73 - presumably USD - for every single passenger for true ancillary charges such as excess baggage and seat selection is incredible.

Tie it to the FF program and charges for fuel and ticket changes… it becomes more believable.

 

[justinbrett]

Agree.

$73 - presumably USD - for every single passenger for true ancillary charges such as excess baggage and seat selection is incredible.

Tie it to the FF program and charges for fuel and ticket changes… it becomes more believable.

It's not even that, it would just be total revenue divided by total passengers.

Most of QFF revenue doesn't come from passengers - it comes from banks and other partners buying points.

 

[oz_boater]

Your post title is very misleading - it says right there in black and white that the Qantas FF program is the ancillary revenue it's counting (>80%), not LCC-style onboard ancillary revenue.

These numbers don’t seem to match

If it is $42 FF per pas, and $73 revenue - how is 43 at least 80% of 73?

 

[justinbrett]

These numbers don’t seem to match

If it is $42 FF per pas, and $73 revenue - how is 43 at least 80% of 73?

I'm guessing the first table was divided by QF pax only, the second table was divided by QF group (inc JQ) pax.

Don't think this is a high quality report, I wouldn't look too closely at it.

 

[dylarr]

Note: I know people on this forum will rightly say that you can join QFF anywhere in the world. Whilst that is absolutely true, I would challenge them to tell me how one could actually earn QFF points if you are not based in Oceania, particularly from shopping activities.

Amex US/UK members can transfer their MR points to Qantas at a 1:1 rate in 500 point increments?
Or Citi US members can transfer ThankYou points to Qantas at a 1:1 rate?

Just some examples. There's more here:

https://www.qantas.com/au/en/frequent-flyer/earning-points/cards-banking/international-points-earning-credit-cards.html

 

[stm1sydney]

I'm guessing the first table was divided by QF pax only, the second table was divided by QF group (inc JQ) pax.

Don't think this is a high quality report, I wouldn't look too closely at it.

Otr maybe we should all look at the report and decide for ourselves, and not rely on QF defenders.

 

[justinbrett]

Otr maybe we should all look at the report and decide for ourselves, and not rely on QF defenders.

You should look at the report in total, and not the subjective commentary by anyone here including OP. No need to make it personal.

Here's what was left out in this thread (taken from the report linked above):

These results include Qantas Domestic, Qantas International, and Qantas Loyalty. Jetstar is the low fare affiliate of Qantas; please see the separate listing. However, Jetstar’s contribution to Qantas Loyalty results are not separated from the consolidated results for Qantas Airways.

And thus confirms my assumption that the first table was QF only, and the second table was including JQ.

It also says the QF share of ancillary revenue to total revenue is 15.7%, which is similar to US carriers AA (15.7%), DL (17.5%), UA (17.5%); and others - NZ (18.8%), JL (14.3%).

As opposed to the actual LCCs - Spirit (51.5%), Ryanair (35.7%) etc

 

[kangarooflyer88]

Your post title is very misleading - it says right there in black and white that the Qantas FF program is the ancillary revenue it's counting (>80%), not LCC-style onboard ancillary revenue.

What difference does it make if the airline nickel and dimes you on frequent flyer fees versus excess baggage? It is a distinction without merit!

-RooFlyer88

 

[MEL_Traveller]

What difference does it make if the airline nickel and dimes you on frequent flyer fees versus excess baggage? It is a distinction without merit!

-RooFlyer88

Massive difference!

Regular pax flying Qantas aren’t going to be asked to pay for bags, snacks, drinks, seat selection or for the convenience of ‘checking in with a real person’ at the airport!

The title of this thread is ‘Qantas the king of the LCCs?’, and Qantas is not that in any description… particularly in terms of adding charges on to a base ticket price.

They may be experts at adding fuel surcharges to awards, but that’s not an LCC thing.

 

[kangarooflyer88]

Massive difference!

Regular pax flying Qantas aren’t going to be asked to pay for bags, snacks, drinks, seat selection or for the convenience of ‘checking in with a real person’ at the airport!

Seat selection is extra especially if you didn’t book direct with Qantas and don’t have status. Also such analysis doesn’t take into account JetStar where they do charge for everything!

They may be experts at adding fuel surcharges to awards, but that’s not an LCC thing.

Fuel surcharges are not anything new to FFPs. What is new is how excessive they are on Qantas versus say Air Canada or Delta. It’s also important to consider the cost of fees related to frequent flyer from the $99 to sign up for the program to things like change and cancellation fees.

-RooFlyer88

 

[Lynda2475]

You can join QFF for free from their own Web page https://www.qantas.com/au/en/frequent-flyer/discover-and-join/join-now.html/code/FAMILYFREE

Also free with any points earning credit card or via Woolworths everyday rewards or redenergy.

Doubtful many pay the $99.

Existence of a FFP doesn't make a company a LLC, nor does charging for cancellation on non flex tickets or for premium seat selection. You would be pushing to find any airline that has free cancellation on non flex fares.

 

[justinbrett]

What difference does it make if the airline nickel and dimes you on frequent flyer fees versus excess baggage? It is a distinction without merit!

-RooFlyer88

It's not a direct passenger spend - it's general revenue for the FF program - most of which comes from ground partners such as banks.

 

[Princess Fiona]

An interesting report was just released from market research firm Idea Works Company which investigated ancillary revenue made by airlines globally. For those unaware ancillary revenue means revenue generated for services aside from that base ticket purchase. For instance, seat selection or baggage fees are classic examples of such sources of ancillary revenue. Ancillary revenue is the bread and butter of so called low cost carriers (LCCs) like Spirit Airways or EasyJet who charge a low base fee to lure passengers into booking the flight with them (i.e. LHR to Europe for £10 one way is not uncommon) but then charge for literally anything else you could want such as carry on bags, seat selection, drinks and meals, etc.

Although the report provides a fascinating look at airline revenues and how they performed and recovered before/during/after the pandemic, there are a couple of gems in this report that I think are very pertinent to Qantas specifically. In particular, Table 5 of the report investigates how much ancillary revenue airlines make on a per passenger basis, and could you believe it Qantas is number 2, just behind the legendary luxury leisure provider Jet2:
View attachment 351771

There were also a couple of gems reported about their frequent flyer program, namely that QFF is amongst the top frequent flyer programs in the world in terms of revenue generated. In particular, their frequent flyer program generates the most revenue on a per passenger basis, which suggests that Qantas could benefit in expanding eligibility to join QFF to people outside Australia. Note: I know people on this forum will rightly say that you can join QFF anywhere in the world. Whilst that is absolutely true, I would challenge them to tell me how one could actually earn QFF points if you are not based in Oceania, particularly from shopping activities.
View attachment 351772

Some more data points from the report related to QFF that might be worthy of discussion:

• 6% of QFF members hold elite status with the airline (likely substantially smaller than anyone on this forum would predict)
• Last year 66% of members accrued miles from flying (with it being the top category for accrual) whereas credit cards, financial services and insurance only accounting for 44% of members and 44% of members accruing points through loyalty partners (i.e. EveryDayRewards)

-RooFlyer88

What you have failed to mention is that the QF result for ancillary revenue is only comprised of revenue from QFF as that is the only ancillary revenue they disclosed. It’s on page 91 of the report.

It’s nothing to do with selling add on seat selection etc.
The entire title and premise of the thread is misleading.

 

[MooTime]

What you have failed to mention is that the QF result for ancillary revenue is only comprised of revenue from QFF as that is the only ancillary revenue they disclosed. It’s on page 91 of the report.

It’s nothing to do with selling add on seat selection etc.
The entire title and premise of the thread is misleading.

I agree, that title completely misleading and incorrect.
Should be changed, moderator?

King... Should be 1st or 2nd on the list, it's not, far from it.

 

[Princess Fiona]

I agree, that title completely misleading and incorrect.
Should be changed, moderator?

King... Should be 1st or 2nd on the list, it's not, far from it.

Fixed it
Thank you

 

[RooFlyer]

I wasn't keen on the original thread title (bit of click bait), but at least it ended in a '?' inviting readers to make up their own minds.

I thought it was a good thing on AFF to challenge people to think about a contention, and discuss. Agree or disagree with the thread premise.