Who Profits when You Earn Points/Miles ❓🤔

[MEL_Traveller]

Jetstar did this to my flight from Melbourne to Singapore. For a seat I upgraded to for $25 preferred seat (very first row window seat in economy) and changed me to middle row to the preferred seats at the very back row. To another "preferred" peassenger or someone higher up that works for their company. And they didn't even change aircraft! And I complained and want a refund to give up my upgraded seat and the customer support person and check-in staff said they can't because the preferred seat fee is non-refundable. Such scumbags. Knowing Jetstar they'd sue me if they could but they won't because I have my boarding pass and email notification of the seat which I received versus what I got on my boarding pass. That is why I never take Jetstar because of the coughty company executive and the bogans that take it. However I still take Qantas but they won't be getting any money out of me as I am only using points from credit cards I earned during promotions efinitely won't earn a single cent of revenue from me for their coughty values and priorities that part is 100% certain.

ALL of the points you earned during promotions are profits that go directly to Qantas and Jetstar!! lol.

The airlines sell the points to banks and credit cards, who then give them to you. And you give them back to the airline, at a profit.

 

[fly2earth]

ALL of the points you earned during promotions are profits that go directly to Qantas and Jetstar!! lol.

The airlines sell the points to banks and credit cards, who then give them to you. And you give them back to the airline, at a profit.

Not if you don't redeem them. If I use them up then Qantas will Feel the Bern
I get mine at Woolies for purchases that I will make anyways so it's not like the points are coming out of Qantas directly.

 

[MEL_Traveller]

Not if you don't redeem them. If I use them up then Qantas will Feel the Bern
I get mine at Woolies for purchases that I will make anyways so it's not like the points are coming out of Qantas directly.

They are though Woollies pay qantas for the points. Which they then give to you. Which you then redeem.

Whether you redeem for flights, vouchers or a toaster, the airline makes its profit (around 50%)

If you didn’t want to give any airline revenue, you’d not only need to not buy their tickets, but also stop earning points!

 

[fly2earth]

They are though Woollies pay qantas for the points. Which they then give to you. Which you then redeem.

Whether you redeem for flights, vouchers or a toaster, the airline makes its profit (around 50%)

If you didn’t want to give any airline revenue, you’d not only need to not buy their tickets, but also stop earning points!

If I don't redeem them the airlines earn more because I'm not turning in my points into actualised value. They are the currency printer so it doesn't matter if they print a million or a billion points. How in the world are they making money as they already issued the points may i ask isn't it more beneficial for them for you to earn and forget your points like many people do with airline miles that have hard expiry dates?

 

[MEL_Traveller]

If I don't redeem them the airlines earn more because I'm not turning in my points into actualised value. They are the currency printer so it doesn't matter if they print a million or a billion points. How in the world are they making money as they already issued the points may i ask isn't it more beneficial for them for you to earn and forget your points like many people do with airline miles that have hard expiry dates?

The fact that you’ve earned them = profit for them.

Yes, redeeming them would actually dent their profits!

If you don’t want to give airlines another dime, you’d have to also not earn their currency.

Earning bank points, or Amex points, and not redeeming for air travel would also be another way to not contribute to alpirline profits.

 

[fly2earth]

The fact that you’ve earned them = profit for them.

Yes, redeeming them would actually dent their profits!

If you don’t want to give airlines another dime, you’d have to also not earn their currency.

Earning bank points, or Amex points, and not redeeming for air travel would also be another way to not contribute to alpirline profits.

I'll use up all my Qantas points with Qantas that I "accidentally forgot" I owned and stop flying (thank goodness for qantas I remember i had them as i had close to 0.5 million points total). Also register for my free bonus 10,000 points directly FROM Qantas through their green tier promotion so as not to increase their revenue since it is the money directly printed by them which they do not sell to third parties. Then remember to use it up (by redeeming business class ticket and booking a late night flight so I can stay all day in the business lounge before flight commences).

 

[equus]

Yes, redeeming them would actually dent their profits!

Not at all.

The accounting for points is convoluted, but profit accrues to the books at both earning and redemption (each being a part of the income).

At the point of issue, a portion of the money received is taken to profit (IIRC attributed to marketing or the like), The rest is accounted for is revenue in advance - not profit, but money sitting on the books, untaxed, and able to be used. When points are redeemed (or lost due to breakage), then that revenue in advance is accounted for, and leads to another portion of profit.

 

[MEL_Traveller]

Not at all.

The accounting for points is convoluted, but profit accrues to the books at both earning and redemption (each being a part of the income).

At the point of issue, a portion of the money received is taken to profit (IIRC attributed to marketing or the like), The rest is accounted for is revenue in advance - not profit, but money sitting on the books, untaxed, and able to be used. When points are redeemed (or lost due to breakage), then that revenue in advance is accounted for, and leads to another portion of profit.

Yes… but… if they sell the point at 1c to the bank. And it never gets redeemed (breakage), the airline has made 1c.

If a person redeems that point, at the notional value of .6c, the airline has lost that .6 of a cent?

Redeeming the point actually loses them the maximum profit if the point was never redeemed?

Although… if the cost to redeem an award seat is ‘x’, but the fuel surcharge far surpasses the actual cost of that seat, they could be losing profit there.

 

[fly2earth]

Not at all.

The accounting for points is convoluted, but profit accrues to the books at both earning and redemption (each being a part of the income).

At the point of issue, a portion of the money received is taken to profit (IIRC attributed to marketing or the like), The rest is accounted for is revenue in advance - not profit, but money sitting on the books, untaxed, and able to be used. When points are redeemed (or lost due to breakage), then that revenue in advance is accounted for, and leads to another portion of profit.

OK so they get paid getting their own points back. and convert it in money? or however way they chose to actualise their pay? whereas they can print however much they want in the first place. congrats you have just discovered a space time continuum

 

[equus]

If a person redeems that point, at the notional value of .6c, the airline has lost that .6 of a cent?

Redeeming may result in less profit than breakage, but only if the costs associated with the redemption (costs to earn the revenue received in advance) exceed the costs associated with breakage.
Assuming the costs or breakage are zero (or close to it), then less profit would be made from a redemption, unless the other additional revenue included (fuel fines etc) exceed the cost of the redemption.
Receiving less than the maximum possible profit from revenue received in advance is not losing anything, it is just not making the maximum profit. It is only the future revenue sitting on the books - the costs associated with earning it that have to be deducted at the time the revenue is earned are unknown.

 

[fly2earth]

Yes… but… if they sell the point at 1c to the bank. And it never gets redeemed (breakage), the airline has made 1c.

If a person redeems that point, at the notional value of .6c, the airline has lost that .6 of a cent?

Redeeming the point actually loses them the maximum profit if the point was never redeemed?

Although… if the cost to redeem an award seat is ‘x’, but the fuel surcharge far surpasses the actual cost of that seat, they could be losing profit there.

I just get mine from woolies and woolies is not going to buy any qantas points directly for me anyways out of the billions of qantas points it statshes so not like its gonna make a difference

 

[equus]

OK so they get paid getting their own points back. and convert it in money?

No, they don't get 'paid' for the points at the time of redemption, the money is received when they issue them (if issued to a third party that paid for them). That money is not able to be fully accounted for as revenue when received.
Profit and cash received are different - as are the timings.

 

[fly2earth]

Redeeming may result in less profit than breakage, but only if the costs associated with the redemption (costs to earn the revenue received in advance) exceed the costs associated with breakage.
Assuming the costs or breakage are zero (or close to it), then less profit would be made from a redemption, unless the other additional revenue included (fuel fines etc) exceed the cost of the redemption.
Receiving less than the maximum possible profit from revenue received in advance is not losing anything, it is just not making the maximum profit. It is only the future revenue sitting on the books - the costs associated with earning it that have to be deducted at the time the revenue is earned are unknown.

but then the airline is the one charging for the fuel surcharge so they wont need to pay it off if it was waived using points (which we still have to pay anyways because cheap qantas)

 

[equus]

woolies is not going to buy any qantas points directly for me

Not correct - every qantas point you get from Woolies is one that Woolies has paid Qantas for - the fact that they are not individually transacted on a person by person basis does not change that fact.

 

[fly2earth]

Not correct - every qantas point you get from Woolies is one that Woolies has paid Qantas for - the fact that they are not individually transacted on a person by person basis does not change that fact.

Yeah nah...unless the amount of points i redeemed tipped their qantas point supply and cause them to buy another billion points or however absurd amount of points directly from qantas. I'll just be the one depleting woolies massive points bank for all the spend 40 get 2000 point promotions so i can actualise all its value and then book it during peak travel time when the airline is going have to displace other paying passengers because i booked the reward flight. and drinking lots of champagne and collecting lots of amenities while i'm at it

 

[equus]

Yeah nah...unless the amount of points i redeemed tipped their qantas point supply and cause them to buy another billion points or however absurd amount of points directly from qantas. I'll just be the one depleting woolies massive points bank for all the spend 40 get 2000 point promotions

You are completely confusing Woolworths rewards points with Qantas FF points. Those Woolworths promotions don't even touch QF at all. When you choose to redeem Woolworths points for Qantas points (either automatically when you reach 2,000 WW points, or when you change from bank for Christmas to redeem QF points to exchange a whole lot at once) at that point in time Woolworths buys QF points from Qantas at 1,000 at a time. Obviously they don't pay per transaction, and there may be all sorts of ways that the price gets determined, and who knows what the settlement period is, but Woolworths don't have ANY QF points at all - they are not doing some sort of points transfer, and whilst they may contract to buy x number of points to receive a particular price, they don't actually ever have the points.

the airline is going have to displace other paying passengers because i booked the reward flight

The airline is never displacing other passengers because you booked a reward flight - at the most, they are receiving less now for the seat than they might have got later on if someone was willing to pay more - but that is what yield management is all about - the same applies for sale fares etc. Yield management is carefully controlled, and you might be surprised to find that reward seats are not available at peak travel time, unless you are talking something like Points Plus Pay, and then you will find that they are making just as much (or more) profit from that transaction than a cash sale.

 

[equus]

To see the Qantas pictorial on award revenue recognition, refer to this post

 

[fly2earth]

You are completely confusing Woolworths rewards points with Qantas FF points. Those Woolworths promotions don't even touch QF at all. When you choose to redeem Woolworths points for Qantas points (either automatically when you reach 2,000 WW points, or when you change from bank for Christmas to redeem QF points to exchange a whole lot at once) at that point in time Woolworths buys QF points from Qantas at 1,000 at a time. Obviously they don't pay per transaction, and there may be all sorts of ways that the price gets determined, and who knows what the settlement period is, but Woolworths don't have ANY QF points at all - they are not doing some sort of points transfer, and whilst they may contract to buy x number of points to receive a particular price, they don't actually ever have the points.


The airline is never displacing other passengers because you booked a reward flight - at the most, they are receiving less now for the seat than they might have got later on if someone was willing to pay more - but that is what yield management is all about - the same applies for sale fares etc. Yield management is carefully controlled, and you might be surprised to find that reward seats are not available at peak travel time, unless you are talking something like Points Plus Pay, and then you will find that they are making just as much (or more) profit from that transaction than a cash sale.

Booger me. And my ticket still says REWARD J ticket as if I am trying to game the system (and implication being receiving subpar service because of it). Looks like the only way going forward is to travel coach (as in the actual train)

 

[RichardMEL]

Booger me. And my ticket still says REWARD J ticket as if I am trying to game the system (and implication being receiving subpar service because of it).

Huh?

In the immportal words of Paulene - please explain?

 

[fly2earth]

ALL of the points you earned during promotions are profits that go directly to Qantas and Jetstar!! lol.

The airlines sell the points to banks and credit cards, who then give them to you. And you give them back to the airline, at a profit.

Thanks for answering and responding to your own question @MEL_Traveller

Post automatically merged: Apr 20, 2024

Huh?

In the immportal words of Paulene - please explain?

because us cheapos use points to redeem tickets for "free"