Qantas surveying members about spend-based status attainment

[kangarooflyer88]

I imagine that the bean counters at Qantas have looked at what VA is doing and have liked it.

I fully expect Qantas to announce a pure revenue based model within the next 12 months.

Anyone prepared to bet against it?

Since when has Qantas copied anything Virgin does? If anything they’ve tried their hardest to distinguish themselves from them.

Keep in mind too not every airline has adopted a revenue model for loyalty. Some have and it is a growing trend but a decade ago this didn’t exist in the industry at all.

 

[Bundy Bear]

Be interesting to see if they go to revenue based would that mean the end of DSC.

I guess all of us who are life time gold won’t effect them too much.

 

[MEL_Traveller]

Be interesting to see if they go to revenue based would that mean the end of DSC.

I guess all of us who are life time gold won’t effect them too much.

Maybe not DCS but I’ve seen US airlines offer ‘double EQMs’ or whatever lingo they use for their recognition of revenue.

So it might be that you get double the base of your airfare.

 

[mviy]

If they introduce this I might need to consider whether to try to get LTG earlier than planned. Though it wouldn’t be cheap, it may be a lot cheaper than after the devaluation.

 

[serfty]

Since when has Qantas copied anything Virgin does? If anything they’ve tried their hardest to distinguish themselves from them.

Here's one - Qantas short distance SC earning used to be in 600mile zones, matching the distance for award zones.

With "Simpler and fairer™", distance based earning zones were lengthened matching the 750/1500 mile zones of Velocity.

 

[Sabot]

Having been a United Premier Gold refugee from them moving from an entirely BIS (butt in seat) elite program to now a mostly $$$ based program, I think moving the program over to entirely $$$ spend will turn a lot of people off. It's one thing if they offer an option to members to attain status based on spend whilst retaining the existing quasi-distance based status credit system. After all, there probably are a certain portion of members who spend thousands or even tens of thousands on short haul flights on Qantas but have little to show for it given the lack of recognition for spend.

However, moving to a loyalty system based strictly on spend will cause travel behaviour Qantas probably isn't expecting. After all, if you have to spend tens of thousands to get any meaningful recognition on Qantas, then why bother remaining loyal to them? Why not get all the benefits (and then some) of elite status by flying business class on whichever carrier has the best price, schedule and service (here's a hint: Qantas rarely wins on those categories)? The other concern I have is it would send a strong signal to Qantas elites not to fly Qantas on international trips. After all, why fly Qantas whose elite status accrual is based on spend whereas flying AA or British Airways it'll be based on distance again. Remember every carrier that has moved to a $$$ based system for elite status be it United, Delta or AC have carve outs for their partners because they cannot know how much you spend with their partners. For instance, it is well known for United's elite status that discount business (P) fares on a partner like Air Canada can be a very lucrative way of earning status with United.

-RooFlyer88

This is actually spot on, I would probably never fly Qantas Internationally again if they removed the loyalty incentives.

 

[MEL_Traveller]

This is actually spot on, I would probably never fly Qantas Internationally again if they removed the loyalty incentives.

Not removing loyalty incentives, just changing their calculation.

But there is room for both avenues. At the moment those who have high spend may not get rewarded at all. A change offering them status could actually increase QF sales.

 

[Sabot]

Not removing loyalty incentives, just changing their calculation.

But there is room for both avenues. At the moment those who have high spend may not get rewarded at all. A change offering them status could actually increase QF sales.

There are certainly two sides, it's pretty wild when you're buying a heap of BNE to SYD, MEL, ADL & PER in Y every year (for work) and barely cracking Silver.

 

[clifford]

There are certainly two sides, it's pretty wild when you're buying a heap of BNE to SYD, MEL, ADL & PER in Y every year (for work) and barely cracking Silver.

At the moment those who have high spend may not get rewarded at all. A change offering them status could actually increase QF sales.

Yes, but if you're flying for work I would assume that work pays, based on the needs of the business.

So I imagine there won't be much possibility of spending more with Qantas under a pure revenue system (unless work doesn't monitor its travel spend closely). Said by someone who flew extensively for work.

 

[MEL_Traveller]

Yes, but if you're flying for work I would assume that work pays, based on the needs of the business.

So I imagine there won't be much possibility of spending more with Qantas under a pure revenue system (unless work doesn't monitor its travel spend closely). Said by someone who flew extensively for work.

So interestingly, the lufthansa CEO said they were making an average of €7 for every passenger they carry. Lufthansa profit in 2023 was €2.7 billion, with 122 million pax carried.

I think qantas’ figures a bit better than that, but still, you wonder if they are making more money off a single long haul business class passenger at 10k than the 50 domestic short-hauls? With 50 hot snacks, 50 bottles of wine, etc?

 

[33kft]

you wonder if they are making more money off a single long haul business class passenger at 10k than the 50 domestic short-hauls? With 50 hot snacks, 50 bottles of wine, etc?

I don't think the question makes sense. You're comparing profit margin for every customer with the revenue for one J seat. I would expect that the 7 euros quoted by the Lufthansa CEO would include the profit from J seats. So either Y runs at a loss and it's J keeping them profitable, or both have narrow margins.

Given very very few all-J carriers have survived I suspect there is more to it - sure that margin may be thin but if it's 50 revenue pax at 5 euros profit vs one J pax at 50 euros profit and it is significantly easier to sell those 50 Y seats than one J seat, you are still going to want that business.

Last point... I imagine he is talking in aggregates. Yes, there's the food and the fuel and whatnot, there's also call centre agents, marketing people, debt servicing, capital investment, maintenance, who knows what else. If it was a statement made anytime after COVID, I'd take it with a Himalayan sized salt mountain. I suspect as far as the tax man goes he'd rather have called it a 5 euro loss but that might upset the shareholders.

 

[Balad2005]

It looks like Qantas Frequent Flyer has once again been looking at how best to maximise it's profi... errr... I mean make things better for it's customers... and this time it could be considering a shift to spend or revenue-based status attainment, which we have recently seen announced over at VA Velocity, and would be in line with many other foreign airlines that have done the same over the years (AY, DL, AA, BA (for Avios earn only), etc.). There's nothing confirmed here, of course, it's just some questions in a Red Planet survey, but still it's enough to set a cat amongst the pigeons, no doubt!

You can read more about the story over at ET, here:

Could Qantas move to spend-based status?

The controversial ‘revenue-based’ model has already been adopted by several North American airlines.

www.executivetraveller.com

For some, this could be a death knell of sorts to their prospects of retaining [meaningful] status with QFF; those who rely heavily on BFoD volume and maxmising connections to reach their number each year come to mind, but for others, it could make it easier to retain based on their existing patterns, or even end up pushing them into higher levels of the program than was previously possible for them.

Myself, being a flyer who does so exclusively for leisure at the moment, and who only flies J (a mix of revenue and CR flights; predominantly on QF and OW), I would likely break even on retaining WP with such a change, but that does assume there is still some form of status boosting promotion/s on an annual basis, like DSC, under a revenue-based model. I can't see QF walking away from these marketing promotions even if they did move to that model, as they would likely form a material part of their yearly Q4 income projections.

What's your thoughts on the possibility that this happens - however unlikley - and the impact it could have on your ability to attain/retain the same or better status in QFF?

Cheers,
Matt.

Post automatically merged: Yesterday at 8:09 PM

If Qantas goes on the spend route it will still favour the top tier flyers.
Regional fares are always higher so there may be some benefit for people who travel to somewhere else other than Sydney ,Melbourne , Brisbane and the tourist hot spots.
I am a lifetime silver FF , nudging life time gold .At my present on my annual spend rate.,I will strike LT gold in about 3 years. I saw a post a couple of years ago which estimated one has to have spent around $100,000., to reach LTS. My travel is a mixture of self fund and work trips .For work the office accountants dictate which carriers one can take , so sometimes I have Qantas one way and Virgin the other . A Revenue-based scheme will have an inflationary effect on the number of status points one needs to stay in the zone and most likely blow out my and many others obtaining LT G or S several more years. So much for brand loyalty.

 

[elanshin]

There would also be the slight complication with PC CR status earn.

Unless they want to scrap that. Many people might look into this side significantly more as well. So anyone want to fly adl-mel-cbr-syd-bne-drw-sin on a rewards J during dsc?

 

[MEL_Traveller]

I don't think the question makes sense. You're comparing profit margin for every customer with the revenue for one J seat. I would expect that the 7 euros quoted by the Lufthansa CEO would include the profit from J seats. So either Y runs at a loss and it's J keeping them profitable, or both have narrow margins.

Given very very few all-J carriers have survived I suspect there is more to it - sure that margin may be thin but if it's 50 revenue pax at 5 euros profit vs one J pax at 50 euros profit and it is significantly easier to sell those 50 Y seats than one J seat, you are still going to want that business.

Last point... I imagine he is talking in aggregates. Yes, there's the food and the fuel and whatnot, there's also call centre agents, marketing people, debt servicing, capital investment, maintenance, who knows what else. If it was a statement made anytime after COVID, I'd take it with a Himalayan sized salt mountain. I suspect as far as the tax man goes he'd rather have called it a 5 euro loss but that might upset the shareholders.

There’s no doubt economy ‘pays the bills’, the fuel and everything else. The profit likely comes for the more expensive seats.

My point is that some argue that doing 100 flights a year should give lounge access, but one person spending $10k on a single flight should miss out, because they’re not a ‘frequent flyer’. I don’t see why both can’t be accommodated.

There’s a fascinating documentary on the economics of air travel featuring AA. A single passenger on a transcon 767 could make the difference between the flight operating at a profit, or loss!

 

[Lynda2475]

It has been stated before the person who flies one $10k J trip a year does get lounge access as part of J, what is the point of giving them more since they dont fly more? If they want gold all they need do is book that 1 trip in DSC plus add a domestic trip in the same period and they'd have SG.

Also on Dom whY flights alcohol is only served after midday and many do not bother given the cheap wine available (which Im sure QF purchase well below retail).

I saw a post a couple of years ago which estimated one has to have spent around $100,000., to reach LTS.

I call BS on that; I'm LTS and have spent no where near that (even if you include my work funded dom Y travel).

Looking at my last 3 FF years which have been 100% self funded (includes forward bookings for the current year ending 31-Jul-25) I have/will earnt/earn 4,316 SCs (including loyalty bonus' and green tier) for a total spend of $21,792. That means each SC cost $5.04. So IME LTS silver can be achieved for $35k (probably less if one wanted to take indirect flights, or only book during DSC).

 

[JohnK]

I know some argue that weekly flying shows loyalty… but 100 flights a year also = 100 times catering, 100 times baggage handling, 100 times gate handling, etc.

And these are the people that keep the airline flying, allows the airline to have the aircraft and maintain the schedules.

There needs to be balance but attaining status on pure profit makes no sense at all. Actually may make a little sense for the accountant but that's about it.

Apart from some cheap status runs, QFF was OK. There was enough of a carrot for someone like me flying 60-80 flights on cheap domestic flights and also dor someone flying up front. Virgin has gone to the other extreme and Velocity has little attraction.

Anyway I'm now lucky that I don't need to play their game.

 

[elanshin]

I call BS on that; I'm LTS and have spent no where near that (even if you include my work funded dom Y travel).

Looking at my last 3 FF years which have been 100% self funded (includes forward bookings for the current year ending 31-Jul-25) I have/will earnt/earn 4,316 SCs (including loyalty bonus' and green tier) for a total spend of $21,792. That means each SC cost $5.04. So IME LTS silver can be achieved for $35k (probably less if one wanted to take indirect flights, or only book during DSC).

That's if you know how to work the SC system. I'd argue that the average person is paying on about $10-15 per SC. This amount can balloon out to $20 per SC if you are last minute booking flights.

You can just look at the prices on some heavy traffic routes and their prices.

SYD - MEL OW ~$160 in Y for 10 SC (that's 16 per SC)
SYD/MEL - SIN RT~1000 in Y for 60 SC (thats also about 15 per SC).
Syd - HND RT ~1200 in Y for 60 SC (thats 20 per SC)
SYD/MEL - LHR RT ~1800 for 160 SC (about 11-12 per SC)

It's only when you start doing some interesting routes in J that the SC per $ comes down drastically.

Now yes you can factor in getting 50 SC every year and some bonuses here and there but there's only so much you can earn per year realistically.

 

[Lynda2475]

Even without DSC (and only a portion of my travel leveraged DSC), you could easily do for about $60k. IME $100k is just unrealistically high.

 

[MEL_Traveller]

It has been stated before the person who flies one $10k J trip a year does get lounge access as part of J, what is the point of giving them more since they dont fly more? If they want gold all they need do is book that 1 trip in DSC plus add a domestic trip in the same period and they'd have SG.

So if they don’t fly more, what’s the harm in recognising their financial contribution?

It might be that aside from their one trip to LAX, they do a couple of domestic flights in economy a year. Why not keep those on QF - by giving the benefits of gold - then have them go to VA?

I dunno if there’s any ‘perfect’ system?

 

[Lynda2475]

So if they don’t fly more, what’s the harm in recognising their financial contribution?

Their financial contribution is recognized in up to 3 different ways.

1. They get superior seat, meals, PJs and luggage allowance and they earn more FFPs and SCs for the flight than someone who bought a PE or Y ticket

2. The points contribute towards PC/PC+ which provides benefits such as lounge passes and earning SCs on reward flights

3. They will earn points (and possibly bonus points) for purchasing the fare on their CC.

It might be that aside from their one trip to LAX, they do a couple of domestic flights in economy a year. Why not keep those on QF - by giving the benefits of gold - then have them go to VA?

If they also do some domestic travel, then they would easily have SG if they choose Qantas for that; no need to change the program rules to reward non frequent flyers above those who do BIS flying. 1 return trip in any class does not a frequent flyer make.

If you are prepared to pay $10k to fly J internationally, you likely wouldn't need to fly budget airlines like VA or JQ domestically unless going somewhere where VA is the only carrier i.e. Christmas Island. QF domestic whY sale fares are regularly available and the QF flights tend to be more frequent.

I dunno if there’s any ‘perfect’ system?

IMO whilst not perfect the current QF system is far superior to the new VA system, I say dont break what isnt broken.

I'd prefer QF focus their investment on getting more planes back in service than messing about with the FF program and making lounges even more crowded.