"... we'll shortly announce a major investment to improve our Frequent Flyer program"

[Mr H]

Intra Europe and SH Asia is far better value IMO.

Like many programs, it has sweet spots. Very short haul business class is one of them. But the fundamental disadvantages with Avios is that mostly you can’t get multiple flights in one ticket - including connecting flights - without phoning to do the booking and paying a hefty fee for the privilege. And if intra Europe J is a selling point then it is offset by the way European J flights use economy seats.

 

[clifford]

Like many programs, it has sweet spots. Very short haul business class is one of them. But the fundamental disadvantages with Avios is that mostly you can’t get multiple flights in one ticket - including connecting flights - without phoning to do the booking and paying a hefty fee for the privilege. And if intra Europe J is a selling point then it is offset by the way European J flights use economy seats.

Not much alternative unless flying TK (which is fine with my lifetime UA*G).

 

[Mr H]

Not much alternative unless flying TK (which is fine with my lifetime UA*G).

I’d just pay deep discount revenue Y and save the points for something better.

 

[J-P]

AFR article now effectively confirming the rumoured changes:

Qantas closes in on biggest frequent flyer revamp yet

Under the changes being discussed internally, customers would be able to exchange one point for 1¢ on almost any flight across the network, sources said.

www.afr.com

 

[levelnine]

AFR article now effectively confirming the rumoured changes:

Qantas closes in on biggest frequent flyer revamp yet

Under the changes being discussed internally, customers would be able to exchange one point for 1¢ on almost any flight across the network, sources said.

www.afr.com

'The conversion is likely to be more generous for higher cabin classes, they said.'

This is certainly an interesting new tidbit of information. I wonder how much more generous it will be. Are we talking 1.1c/pt or more like 1.5-2c/pt?

 

[Mr H]

This is paywalled - any chance of copy/pasting the whole article?

 

[Berlin]

For me, the only thing that matters is whether Classic flight awards will still be existing. And something tells me, they will more and more “disappear”, even if only over time.

 

[CaptJCool]

From the AFR article

In a note to clients last week, Jefferies equities analyst Anthony Moulder said the number of Qantas Frequent Flyer members had increased 76.7 per cent since 2012, but the number of Classic Seat redemptions had only risen from about 4 million to some 5 million.

And this from 2012


In a decade that’s a lot of extra members

From 2008
5 million members so tripled in 15 years

 

[Doctore1003]

'The conversion is likely to be more generous for higher cabin classes, they said.'

This is certainly an interesting new tidbit of information. I wonder how much more generous it will be. Are we talking 1.1c/pt or more like 1.5-2c/pt?

Very interesting indeed. This line was *not* in the first version of the article (looking at the two snapshots on Archive.Today)

 

[Doctore1003]

Would be great if you could get 1.5 cents per point on a sale business class fare ($6k fare for 400k points). I'll be shocked if that is possible.

 

[sudoer]

This is paywalled - any chance of copy/pasting the whole article?

Add 12ft.io/ to the start of the URL

 

[Doctore1003]

"changes are expected to focus on improving member engagement, increasing the value of a point to partners. Over time, these higher billings are expected to offset the higher program cost and lower breakage"
So, Qantas plans to sell more points at a higher price to partners (banks etc) to maintain its margins.

 

[levelnine]

"changes are expected to focus on improving member engagement, increasing the value of a point to partners. Over time, these higher billings are expected to offset the higher program cost and lower breakage"
So, Qantas plans to sell more points at a higher price to partners (banks etc) to maintain its margins.

Interesting. Something none of us had thought of.

Even if we don't use the new awards tier, we're all going to pay for it in terms of worse sign-up bonuses and points earning ratios from Woolworths, etc as Qantas look to squeeze its points partners.

 

[Doctore1003]

Interesting. Something none of us had thought of.

Even if we don't use the new awards tier, we're all going to pay for it in terms of worse sign-up bonuses and points earning ratios from Woolworths, etc as Qantas look to squeeze its points partners.

Maybe. But if points cost partners more, and the partners also value them more (because customer demand rises), then maybe bonuses and conversion rates don’t have to be reduced?

Need an economist to chime in on this one.

 

[CaptJCool]

if points cost the supplier more, then either they can carry the extra cost burden, or more likely, pass them onto the consumer, thru for example, devaluing the points conversion rate - (eg as has happened in the past 2:1 becomes 1:1 becomes 1:0.5 this being the experience of many in one of the programs becomes 1:0.4 - which is the case for some of the current conversion rates)

this starts to get to "why bother"

 

[levelnine]

But if points cost partners more, and the partners also value them more (because customer demand rises), then maybe bonuses and conversion rates don’t have to be reduced?

If customers value them more, then you as a supplier can afford to raise your prices.

In the credit card space, I think we'll see a combination of the following:
1. Higher annual fees.
2. Higher minimum spend requirements
3. More multi-year sign-up bonuses, requiring you to pay two annual fees to get the full bonus.

That way banks can continue to offer the blockbuster offers (100K+ points) while preserving margins.

 

[Mr H]

If points cost the supplier more, then either they can carry the extra cost burden, or more likely, pass them onto the consumer, thru for example, devaluing the points conversion rate - (eg as has happened in the past 2:1 becomes 1:1 becomes 1:0.5 this being the experience of many in one of the programs becomes 1:0.4 - which is the case for some of the current conversion rates)

One of the drawbacks of the FF model is that the price of points remains pegged to the dollar. As the value of the dollar erodes through inflation, there are more points chasing the same number of awards. So awards are jacked up in price, devaluing the points.

If the proposed model is to increase the dollar cost of points while leaving the point cost of redemptions alone, then it preserves the value of existing points while devaluing newly issued points. That seems fair.

What I am missing is the logic suggesting that adding a new tier of redemptions at a higher points price (compared to classic awards) is going to lead to an increase in value of the points - unless they really do believe that the lack of awards is so serious that their points have become worthless and that more (but more expensive) awards would turn worthless points into valuable points.

 

[muppet]

One of the drawbacks of the FF model is that the price of points remains pegged to the dollar. As the value of the dollar erodes through inflation, there are more points chasing the same number of awards. So awards are jacked up in price, devaluing the points.

If the proposed model is to increase the dollar cost of points while leaving the point cost of redemptions alone, then it preserves the value of existing points while devaluing newly issued points. That seems fair.

What I am missing is the logic suggesting that adding a new tier of redemptions at a higher points price (compared to classic awards) is going to lead to an increase in value of the points - unless they really do believe that the lack of awards is so serious that their points have become worthless and that more (but more expensive) awards would turn worthless points into valuable points.

I completely agree. And yes I think they are worried about the value of points from the consumer’s perspective. I know a bunch of friends and family say things along the lines “I don’t bother with the points anymore, can’t get a seat.”

 

[levelnine]

What I am missing is the logic suggesting that adding a new tier of redemptions at a higher points price (compared to classic awards) is going to lead to an increase in value of the points - unless they really do believe that the lack of awards is so serious that their points have become worthless and that more (but more expensive) awards would turn worthless points into valuable points.

That's pretty much what Qantas appear to be saying: "Over time, these higher billings are expected to offset the higher program cost and lower breakage".

In layman's terms, that sentence suggests they think Qantas points will be higher in value because customers can now redeem them for 1c/pt rather than 0.7c/pt with P+P (ie it is costing Qantas money to offer this new 1c/pt option) & fewer people will abandon their points (ie breakage) due to being unable to find award seats.

 

[shuuy]

Given I save my points for J / F bookings ... or last minute classic Y rewards when it's $300 to fly SYD-BNK... I'm not wiling to pay 1,000,000 points for a $10,000 ticket to London in business class.

You can see what US airlines have done to enhance their program - earn points based on $ spent, dynamic pricing on awards... making it harder to find 'good value' with miles unless it's in economy.

Qantas of course have a marketing/brand challenge now... and not sure any spin could make these 'enhancements' favourable.

So I'm convinced this will be a good move for shareholders. For frequent flyers (or card earners)... we shall see over time.