Qantas surveying members about spend-based status attainment

[Gremlin]

Or are they sticky because of the current arrangements?

In loyalty, customers that are 'too sticky' indicate there's more margin to be extracted because your customers will bear more. Devaluation, in one form or another, is a given if that's the case.

 

[33kft]

Emerging experience shows that it's profitable overseas. The question is "why would it be different here?"

That's a ridiculous question, sorry. There are more than 70 programs worldwide and of those, how many are revenue based for status? BA (not yet), VA (not yet), AA, UA, Finnair, Delta,....? According to this, it's different for 91% of frequent flyer programs, many of which rank higher than those programs, and one of which is relevant regionally to our market, but which we have absolutely no insight into because it hasn't commenced.

There is hardly going to be one common rule that you could just blanket attribute to all programs, and I don't see why this would be the first.

 

[moa999]

to do what their boss wants

But who says the boss wants it. A survey of something a few other airlines have introduced doesn't mean much.
The AA program is still very different to BAs, particularly in terms of CC earn contribution.

The question is "why would it be different here?"

Case in point is WA FIFO workers.
Very high revenue, but I suspect still pretty low margin due to the nature of remote operations and low aircraft efficiency on these routes.

One item of BAs changes i found interesting was BA Holidays. I assume this is mostly targeted at the self-funded traveller rather than corporate, but seems an interesting push for additional incremental margin at almost zero cost.

Qantas has run a few bonus points programs for Qantas Hotels, which as I understand book via Expedia with presumably Qantas getting a comission, but giving SCs (or equivalent for this) might supercharge the program amongst some.

Of course it's a tradeoff to hotel programs as these bookings generally don't give the hotel programs benefits.

 

[Sabot]

In loyalty, customers that are 'too sticky' indicate there's more margin to be extracted because your customers will bear more. Devaluation, in one form or another, is a given if that's the case.

Maybe we will find out just how sticky people are through all of this

 

[justinbrett]

Because you don't have to outrun the bear, you only have to outrun the other guy trying to outrun the bear.

The market, both domestically and internationally, for good or ill, is moving towards a model with far less members attaining tiered status. Qantas have a (relatively) captive market and (relatively) little opportunity to scale membership internationally. It doesn't need to outperform the market on offering, so it won't.


I don't think they want them empty. But they do want them less at capacity and cheaper to run. And lounge access to be a profit centre, not a cost centre. Or is that the quiet part out loud?


Betting against the market then?

Double Status Credits.

 

[Gremlin]

Maybe we will find out just how sticky people are through all of this

My expectation will be a lot of grumbling and predictions of the demise of QFF, especially on these forums, but insufficient change in actual aggregate behaviour for QFF to contemplate moving the dial back. Just like with the elimination of JASAs or the introduction of CR+ or...

 

[Gremlin]

That's a ridiculous question, sorry. There are more than 70 programs worldwide and of those, how many are revenue based for status? BA (not yet), VA (not yet), AA, UA, Finnair, Delta,....? According to this, it's different for 91% of frequent flyer programs, many of which rank higher than those programs, and one of which is relevant regionally to our market, but which we have absolutely no insight into because it hasn't commenced.

There is hardly going to be one common rule that you could just blanket attribute to all programs, and I don't see why this would be the first.

I work in Loyalty (although not with QFF) and it's hardly a ridiculous question. There's a lot more loyalty programs than just the frequent flyer programs out there for QFF (and others) to draw experience from. Shifting to spend based performance metrics is not a new thing and not unique to airlines. And repeatedly, across many verticals, it improves profitability. It encourages different, more profitable and less gamified, behaviours.

Qantas genuinely may be different. They may implement and be less profitable as a result... but I doubt it.

BTW, I think this survey is less about asking the members whether they want this and more about helping form the comms strategy when (not if!) they implement. But that's just how I'd manage something like this and I may not be right...

 

[Gremlin]

Case in point is WA FIFO workers.
Very high revenue, but I suspect still pretty low margin due to the nature of remote operations and low aircraft efficiency on these routes.

Depends if you consider margins with/without subsidies. But other programs (not necessarily airlines) manage anomalies like this by introducing fare classes (or equivalent) that are non-earning.

One item of BAs changes i found interesting was BA Holidays. I assume this is mostly targeted at the self-funded traveller rather than corporate, but seems an interesting push for additional incremental margin at almost zero cost.

Qantas has run a few bonus points programs for Qantas Hotels, which as I understand book via Expedia with presumably Qantas getting a comission, but giving SCs (or equivalent for this) might supercharge the program amongst some.

Almost certainly.

And then on the 'burn' side too. Want J reward flights to HND? Nope, no availability. Want a week's holiday to Japan, including flights in J? Of course there's availability.

 

[kpc]

BTW, I think this survey is less about asking the members whether they want this and more about helping form the comms strategy when (not if!) they implement.

Unfortunately, I suspect you are right

 

[I love to travel]

I work in Loyalty (although not with QFF) and it's hardly a ridiculous question. There's a lot more loyalty programs than just the frequent flyer programs out there for QFF (and others) to draw experience from. Shifting to spend based performance metrics is not a new thing and not unique to airlines. And repeatedly, across many verticals, it improves profitability. It encourages different, more profitable and less gamified, behaviours.

Qantas genuinely may be different. They may implement and be less profitable as a result... but I doubt it.

BTW, I think this survey is less about asking the members whether they want this and more about helping form the comms strategy when (not if!) they implement. But that's just how I'd manage something like this and I may not be right...

I don't diagree but they need to be careful. With the clampdown on credit card churning, there will be a tipping point for some where they do not bother anymore. I only churn for Qantas partner flights, not Qantas flights now.

 

[Gremlin]

I don't diagree but they need to be careful. With the clampdown on credit card churning, there will be a tipping point for some where they do not bother anymore. I only churn for Qantas partner flights, not Qantas flights now.

Card churning is a behaviour that, by it's very definition, is inherently disloyal. Customers that are inherently disloyal in one vertical (cards) have a higher propensity to be inherently disloyal in other verticals (such as choice of airline). It's a gamified behaviour that benefits disloyal customers over loyal ones. Which means it's unlikely to be a tipping point for truly loyal customers.

 

[I love to travel]

Card churning is a behaviour that, by it's very definition, is inherently disloyal. Customers that are inherently disloyal in one vertical (cards) have a higher propensity to be inherently disloyal in other verticals (such as choice of airline). It's a gamified behaviour that benefits disloyal customers over loyal ones. Which means it's unlikely to be a tipping point for truly loyal customers.

The question then though is how many are truly loyal to QF in 2025?

 

[mviy]

There’s not really much choice domestically with neither Virgin nor Jetstar attempting to provide substantially the same product as QANTAS.

You can be loyal to flying QANTAS and not to the credit card provider. By refusing to offer the full sign up bonus every year credit card providers are not encouraging loyalty. If a card offered 100k points every year I’d seriously consider getting it and keeping it long term.

Make the most of the QFF system as it is now and expect there will be a devaluation coming at some point. When a devaluation comes re-evaluate what to do next.

I intend to try to continue to push towards LTG and hope that any devaluation still means that if I don’t yet have LTG, I am getting closer to it albeit with perhaps a few more years of travel needed to get there.

Even if QFF leaves things as they are now, when I get LTG I’d have to seriously question the value of continuing to self fund to retain WP when the LTP target is so out of reach.

 

[muppet]

…
Qantas genuinely may be different. They may implement and be less profitable as a result... but I doubt it.
…

Few programs have the scale and reach that QF does in Australia. Inherent in that is the belief among its users that the redemption opportunities are more valuable than the costs of acquiring points. Pure revenue model will clear that misunderstanding up quite quickly.

Sign-up bonus of $100 of QFF credit for a $400 annual fee credit card? Pass.

Just IMHO of course.

 

[moa999]

Shifting to spend based performance metrics is not a new thing and not unique to airlines. And repeatedly, across many verticals, it improves profitability. It encourages different, more profitable and less gamified, behaviours.

Not sure if I'd agree that it necessarily does that. There are plenty of other factors that determine program profitability - namely the difference between the blended burn and earn cost, breakage and third party income.

Undoubtedly BA and VAs changes hide effective devaluations (or widening the burn-earn cost), but they could have done that within the existing framework as well.

A pure revenue system I suspect works best where you are working at fairly consistent margins, like say a restaurant or even supermarket.
Eg. Say Oporto Flame Rewards, where indeed the rewards are in $, and you earn $1 per $20 spend at base down to I think $12 at a high tier. And I suspect the 'program' is profitable because they then 'pay' the franchisee at a wholesale/ cost+ price (say $0.60 on the $ redeemed).

Think as discussed upthread some flights are more profitable than others (and VA has recognised this with the Flex/ Basic distinctions)

The biggest issue for Qantas FF imho is the main strength of the business is that QFF points are a defacto currency, and they have lots of third party businesses willing to purchase points.
Any change that reduces engagement arguably threatens that valuable income.

And within certain segments gamification is a strong part of the engagement.
Make it too obvious (eg. You have to spend $20k on SYD-MEL flights to earn a single one-way reward) and that attraction drops.

As for credit card churn - that's frankly the banks (third parties) issue, and I'd think there are some fairly simple ways to control that.

 

[MEL_Traveller]

Few programs have the scale and reach that QF does in Australia. Inherent in that is the belief among its users that the redemption opportunities are more valuable than the costs of acquiring points. Pure revenue model will clear that misunderstanding up quite quickly.

Sign-up bonus of $100 of QFF credit for a $400 annual fee credit card? Pass.

Just IMHO of course.

But not to confuse status with points earning.

Access to lounges comes with a $10k spend. But you can still churn CC for points, and still earn points by flying or getting your groceries at Woollies.

Goes back to a point I made earlier on in this thread… does everyone in economy need to be gold with lounge access to stop them flying another airline?

 

[muppet]

But not to confuse status with points earning.

Access to lounges comes with a $10k spend. But you can still churn CC for points, and still earn points by flying or getting your groceries at Woollies.

Goes back to a point I made earlier on in this thread… does everyone in economy need to be gold with lounge access to stop them flying another airline?

Yep for sure this thread is about status. But I think @Gremlin post that I replied to was talking about profit and that surely is in reference to points earning and redemption. QC access has a marginal cost of virtually zero based on what’s served up.