Qantas hard sell on direct sweep

[simongr]

Got my post yesterday and found a letter from QFF reaffirming the move to direct sweep and away from optional transfers. It also advised to transfer points now and get a card that had opt-in or direct sweep.

So despite some thoughts about QFF maybe pulling back on this and concern that maybe people werent on board - looks like this is really going ahead...

S

 

[wallacej]

I received an email to the same effect on Tuesday.
.....

2/12/08
From 1 April 2009, there will be changes to your options for transferring points from some credit and charge card reward programs to Qantas Frequent Flyer.

We understand there is still some confusion around these changes.

Put simply, if you hold an affected card and you want to keep earning points:

• transfer your card reward points to Qantas Frequent Flyer now^, and
• opt-in or switch to a direct earn option from your card provider that automatically adds the points you earn on your everyday spending to your Qantas Frequent Flyer account~.

To check if any of your cards are affected, go to qantas.com/cards or call the Frequent Flyer Service Centre
on 13 11 31.

 

[serfty]

... So despite some thoughts about QFF maybe pulling back on this and concern that maybe people werent on board - looks like this is really going ahead. ...

I think it's more a "concern that maybe people werent on board".

Look at the 1Million point promotion and all the mailers. These cost, so I'm guessing the uptake is not what Qantas were hoping.

ISTR a post somewhere in the last week or so that Sales of QFF points represent a large proportion of revenue or profit (Perhaps ~50%). [I'll see if I can dig it up.]

 

[NM]

And if all the points that are currently stored in credit card accounts are transferred to QFF in the month of March, QFF will have an enormous income boost just in time to float/sell the program.

 

[Standby]

And if all the points that are currently stored in credit card accounts are transferred to QFF in the month of March, QFF will have an enormous income boost just in time to float/sell the program.

I'm sure they can only counts the points as cash when redeemed.
Yes once transferred there is implied future total benefit ,just not yet realised

 

[Alanslegal]

I also received the QF letter to the same effect.

In addition, I received an email / survey from a marketing company on behalf of QF wanting to know more information re: these direct sweep changes. The main thrust was how likely would you change your card based on these changes.

I pretty much answered I wanted more flexibility with where my CC points go and would probably avoid opting into the QF direct sweeps.

 

[simongr]

I'm sure they can only counts the points as cash when redeemed.
Yes once transferred there is implied future total benefit ,just not yet realised

The valuation placed on the floated entity would be based on expected future income streams - a combination the unrealised revenue you refer to and the future unrealised revenue that has yet to be earned...

 

[NM]

I'm sure they can only counts the points as cash when redeemed.
Yes once transferred there is implied future total benefit ,just not yet realised

My point is that when a member transfers Credit Card points to QFF, the CC provider pays Qantas for the points (they purchase the points). That is seen as revenue for QFF. QFF incurs the expense when the member redeems the points. It may be different for points earned from flights where there will be accruals at the time of the flight and credits when redeemed. But for credit card points, the credit card provider purchases the points from QFF, so that is immediate revenue for QFF.

 

[simongr]

That is cash rather than revenue. Revenue is only accounted for when the seat is redeemed or when the liability is written off (points expire) or potentially on an atuarial valuation of the future liability based on expected failure to redeem and expiry.

 

[NM]

That is cash rather than revenue. Revenue is only accounted for when the seat is redeemed or when the liability is written off (points expire) or potentially on an atuarial valuation of the future liability based on expected failure to redeem and expiry.

But I am sure it all looks better for QF's planned sale/float of QFF if the points are in their program rather than sitting in a CC provider's account.

 

[simongr]

But I am sure it all looks better for QF's planned sale/float of QFF if the points are in their program rather than sitting in a CC provider's account.

Very much so

 

[JohnK]

I haven't received the latest email but I did receive a letter and few emails last month on the direct sweep of FF points. I cancelled the Earth cards in October, I have stopped uisng the Amex Qantas Premium card and my Amex MR points are staying in Ascent for now. If there is no option to move MR points to QF at my leisure then this will be QFs loss not mine.

So there is some truth in the rumour that Qantas is looking to float/sell the FF program. Our biggest concern would have to be what de-valuation is likely to occur to the FF program as a private entity or is it likely to improve?