Qantas Frequent Flyer points have almost become a de-facto currency in Australia. You can earn Qantas points almost anywhere in this country, and you can redeem them like money in almost as many different places.
Millions of Australians are active members in the Qantas Frequent Flyer program, and it seems like just about everyone has at least a small amount of Qantas points. In fact, in 2021 Australian Frequent Flyer estimated that there were approximately 350 billion Qantas points worth over $3 billion in circulation. That’s roughly equivalent to the GDP of Greenland.
Some people would consider Qantas points to be a de-facto currency in Australia. But economists would not consider frequent flyer points to be a legitimate currency for several reasons.
(As a disclaimer, I have a degree in economics and am approaching this topic with my “economist” hat on, rather than my “airline” hat.)
Contents
The definition of money
According to the Reserve Bank of Australia (RBA), money needs to have three key features:
- Widely accepted as a means of payment
- Unit of account
- Store of value
Let’s look at this in more detail…
Widely accepted means of payment
You can of course redeem Qantas points for goods and services of value, such as flights, toasters or in lieu of paying service fees. And as it happens, Qantas Frequent Flyer points are actually accepted by quite a few different Australian businesses as a form of payment, such as HOYTS Cinemas and BP petrol stations. You can even redeem points for wine, train journeys, insurance, hotel bookings, electronics and gift cards.
But you can’t quite use Qantas points to buy anything. Sure, you could “cash out” your points for gift cards, and then use those gift cards to buy something not otherwise offered on the Qantas Marketplace. But points are not widely accepted throughout the whole economy as a means of payment.
You can’t just go down to your local butcher or bakery and pay in Qantas points instead of Australian Dollars. The butcher or baker also can’t pay their suppliers or rent with Qantas points, and so on.
Ultimately, Qantas retains full control over the types of rewards offered, and their availability.
Unit of account
For money to be considered a unit of account, you need to be able to measure its value.
To some extent, Qantas points do have a fixed value as the airline publishes the exact number of points required for a Classic Flight Reward or upgrade in charts on its website. You could also easily check how many points you’d need to purchase something from the rewards store by simply browsing the website.
Qantas also publishes the price of top-up points – the cost to simply buy points directly from the airline – on its website.
But the exact value of a frequent flyer point is opaque. In fact, section 19.4 of the Qantas Frequent Flyer terms & conditions specifically states:
19.4 Qantas Points do not have a monetary value and cannot be converted to money. They cannot be sold, transferred or exchanged other than in accordance with these Terms and Conditions. The prices for additional Qantas Points do not represent a monetary value for Qantas Points.
Qantas has its own internal valuation of a point, which it has calculated for accounting purposes. But that value is not the same as amount for which Qantas sells points to third parties. Neither is it the same as the value a Qantas Frequent Flyer member would get from redeeming a point.
In fact, the value that a member receives when redeeming points can vary wildly depending on the type of redemption – as this chart from our guide to redeeming Qantas points shows:
Rewards like gift cards or products from the Qantas Marketplace have a reasonably fixed cash value and are in (more or less) unlimited supply. These tend to represent the lowest value.
Rewards that cannot be easily sold or converted into cash, such as a flight upgrade, are often worth a lot more to program members. That said, the marginal cost to the airline of supplying such a reward is generally low because upgrades are usually only given if the seat would have otherwise flown empty.
So, you cannot really use Qantas points to measure the value of something. You also can’t trade other goods or services using Qantas points as the base currency.
This is the same reason that the RBA does not consider cryptocurrencies like Bitcoin to be money. In order to conduct a fair trade, you would first need to convert a cryptocurrency (or Qantas points, in this case) into a dollar amount at the current “exchange rate”.
Store of value
The final defining characteristic of money is that it retains value over time.
Frequent flyer points tend to lose value over time, as airlines increase the number of points needed for certain rewards. In fact, the cost of some Singapore Airlines KrisFlyer redemptions increased by 92% in just six years due to successive program devaluations. And Qantas points were a lot more valuable in the 1990s than they are today.
Money also loses value over time due to inflation. So, that alone does not preclude points from being considered a store of value.
100,000 Qantas points are probably worth the same value today as they will be worth next week. But loyalty programs can and occasionally do unilaterally change the value or ways you can use your points. Usually the program will at least give some notice, although some other airlines such as Emirates have a habit of not warning members in advance.
Ultimately, Qantas has complete control over the supply and use of its points “currency”. And there is no central bank to reign in the amount of points being issued, or to ensure the amount of available rewards keeps up with the number of points in circulation.
Like money, points have no value until they are used. Unlike money, points can expire!
In the case of Qantas Frequent Flyer, your points will not expire as long as you maintain activity in your account at least once every 18 months. But many people either forget about their points or are unable to maintain this activity, and their points expire. In fact, loyalty programs assume a certain level of “breakage” (points that expire unredeemed) as part of their business model.
There have been many stories of Qantas Frequent Flyer members losing their points because they expired. (In this instance, Qantas may offer you a points reinstatement challenge – but not always.)
It’s also worth remembering that Qantas will forfeit your entire points balance after you die. You can at least transfer your points to family members while you’re alive. But points are not like cash. You cannot hold points in your hand, and you cannot just give them away to whoever you want.
With frequent flyer programs that use time-stamping expiration policies, like Singapore Airlines KrisFlyer or Air New Zealand Airpoints, it’s much worse. Those points or miles will expire after a fixed period of time, regardless of your level of account activity. That definitely does not represent a long-term “store of value”!
Other reasons Qantas points are not like money
There are a few other things to consider, as well:
- You cannot sell Qantas points (except perhaps on the “black market”, but this is definitely against the program terms & conditions)
- You cannot “invest” Qantas points – they simply sit in your account and accrue no interest until either redeemed or expired
- Qantas makes a cut every time you earn or redeem a point (except points earned for Qantas Group flights)
- There is a lot less regulation surrounding points than with money – unlike banks, airlines can more or less do what they like (within the confines of the law and their loyalty program T&Cs, of course)
This is not to say that Qantas points are not valuable or that it’s not worth engaging with frequent flyer programs. Many Australians do indeed get a lot of value out of Qantas points! All I’m saying is that you shouldn’t treat frequent flyer points like money, because they’re not.
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