Re: Woolworths rethinking Qantas - or a slow news day
As others have commented on - seems to be a bit of posturing and negotiation tactics playing out in the media. But it is interesting to note the background of both companies at the moment:
Woolworths - has had board ructions, taken major losses on its Masters hardware chain and divested itself of Dick Smith Electronics at exactly the wrong time, they face a resurgent opponent in Coles and Aldi starting to eat their lunch in major cities and fuel retailing going into low crude oil prices. As others have said - their EDR credit cards got changed from HSBC to Macquarie and enhanced in the process leading to mass cancellations of accounts. And this is all in the background of Qantas getting money for the QFF points given to WOW customers in a patchwork economy where many parts of Australia are going into recession and some local areas of Sydney and Melbourne going through a real estate boom. So you have to put yourself in the shoes of the bosses at Woolworths and start to think about squeezing all your suppliers for better value - as far as they are concerned - Qantas is just another supplier - of intangible and increasingly worthless QFF points vs the perceived customer drawcard of getting the points. All with the surprise package that the previously lacklustre FlyBuys scheme has now got a big airline involved with Woolworths main competitor Coles.
Qantas - has a different story from its near death experience and after asking the government for help, has finally slashed costs and cut capacity, tried to re-engage with their demoralized workforce and thanks to large write downs, redundancies, a competitor that was unable to capitalise on QF's mistakes and a very kind price of fuel has returned to some sort of profitability. Business travel is flat and with the falling AUD outbound tourism is doing it very tough with discretionary spending very low, this must be hurting JQd and JQi but its difficult to tell by how much. Their own QFF scheme has been such a success over the years that they have a wide market penetration but with its array of enhancements and punishing OW flyers gradual withdrawal from the OneWorld alliance and so has a reputation of being one of the poorest value least accessible and highes surcharging frequent flyer schemes around, to the point where a lot of people are exploring other loyalty scheme options/alliances in locations where airlines are trying to obtain high value customers. So Qantas has to sit down and work out if withdrawal from the Woolworths retail ecosystem will present them with the market perception that QFF points are becoming either 'niche' or irrelevant (or a defacto toaster currency).
