Points of Contention (Business Day, 19 November 2008)
November 20, 2008
The Business Day (The Age and Sydney Morning Herald) reports that Qantas’s new frequent-flyer plan offers more choice but some remain unconvinced, including comments from the Australian Frequent Flyer, an independent consumer website.
There are two camps when it comes to the new Qantas Frequent Flyer “Any Seat” plan. Some people are relieved they can redeem their points – no matter how many – after struggling to find suitable flights on the traditional, less-flexible plan. Others believe it’s an expensive way to use points.
Then there’s the concern – misplaced, the airline would say – that the new arrangements will make it even harder to bag a frequent-flyer bargain seat.
Under the old plan, now known as Classic Awards, a limited number of frequent-flyer seats is allocated on flights and sold according to the points listed on a fixed-price table.
Under the Any Seat plan, the cost in points depends on the factors that normally go into pricing a seat, such as the time of the year or day of the week.
There has been plenty of chat on websites such as frequentflyer.com.au about the much higher points required for Any Seat bookings. One, admittedly extreme, example cited in an online discussion is a North American first-class round trip at Christmas costing more than 2.2 million points.
Of the concern that Any Seat will mean even fewer seats on the Classic plan, forcing people to use Any Seat, the chief executive of Qantas Frequent Flyer, Simon Hickey, says: “Nothing in Classic has changed and nothing in Classic will change.”
Qantas Frequent Flyer was recently restructured as a separate business division, with a view to selling it to investors, and Hickey says he now has “contracted” seat capacity with Qantas, “so that’s firmer than it’s ever been”.
“We start with the Classic inventory and that was over three million seats last year,” Hickey says. “Any Seat is in addition to that.”
The managing director of frequentflyer.com.au, Clifford Reichlin, says Any Seat bookings can eat up several times the points required for the same route on the Classic plan. However, on the plus side – provided Qantas is true to its word and doesn’t reduce Classic seats – Any Seat provides more choice and will help people use backlogged points, Reichlin says.
A spokesman for consumer group Choice, Christopher Zinn, who also adds the caveat about Classic, says being able to use banked-up points on Any Seat “gives value to something that might otherwise be fairly value-less”.
However, principal of card consultancy MWE Consulting, Mike Ebstein, says it’s still a better idea to plan ahead and schedule your travel at non-peak periods so you can use the cheaper Classic plan. Ebstein has booked a northern hemisphere trip for his wife in May next year for 250,000 points on the Classic plan.
The full story is available on The Business Day website.
Changes to Qantas Frequent Flyer Program (Today Tonight Show, 1 July 2008)
October 17, 2008
Channel 7’s Today Tonight TV program reported on those changes, including comments from the Australian Frequent Flyer, an independent consumer website.
Announcer: Well, unlike the five million that registered Qantas Frequent Flyers, Jody Mears can reach her dream island in the sun under her own steam. Which leaves five million nervous people, mindful that when Ansett went bust, so did their frequent Flyer points.
Still anxious tonight after the national carrier overhauled its loyalty program. As Marguerite Mckinnon reports, some will never fly free again.
With a catchy ad and on its 21st birthday, the Qantas Frequent Flyer program has announced an upgrade.
Qantas Spokesman: What we are providing is a fantastic choice. Firstly, through the new any seat awards. Secondly through points plus pay. Thirdly, through our classic awards and finally through our bigger and better Qantas Frequently Flyer Store.
But the announcement was overshadowed by CEO Jeff Dickson revealing plans to sell of the frequent Flyer business by August.
Jeff Dickson: We certainly would not be making an offering that is inferior to what we are offering now and then say to the public: would you like to invest in this, which is a very good chance this may happen.
While the frequent Flyer business is likely to be sold off, Qantas is trying to lock in loyalty with a new any seat awards for Qantas and Jet Star flights. Designed to give more flexibility, users can trade extra points to get any seat on any flight. And if they don’t have enough points, they can pay the difference in cash.
But if Qantas wanted a good reaction, today’s launch crashed.
Clifford Reichlin: Virtually without exception people are pretty upset about it and they are astounded as to the number of points required now to fly on the any seat option.
Clifford Reichlin from the website frequentflyer.com.au says you now need even more points to get any benefit. Meaning the only winners will be the wealthy and constant travelers.
Clifford: If Qantas reduces the number of frequent flyer seats available in the classical system, and people will be forced to use the any seat option, which will effectively devalue the points.
Qantas Spokesman: We are keeping the classic exactly as it is today, with no changes to the availability.
Martin North: I think the new scheme is designed primarily for those very frequent Flyers, the top ends of the marketplace. And I think they are going to get a lot of extra benefits out of it.
Martin North from Fujitsu Consulting has surveyed frequent flyer users. He says that of the five million frequent Flyer members few believe that they are getting a good deal.
Martin: Around 35% of all households in Australia would say it’s not worth it. And there’s about 25% who are really rabid collectors and there are people in the middle who are a bit skeptical.
Take a one-way Melbourne to Sidney economy flight at two pm tomorrow. Cash is $138. Using the classic frequent flyer system you would need 8,000 points on selected flights only and if you got in early enough. But on the any ticket system, you’d need anywhere from 13,000 to 52,000 points to get a seat.
frequentflyer.com.au users say the new system is ridiculously expensive. Most of us will never travel first class in our lives and here is another reason why – the most expensive flight. Using any time awards, a first class return flight from Adelaide to Portland, Oregon USA via Sidney to L.A. would need 2.4 million points.
Paying cash would cost $22,000, but if you used a one point per dollar credit card system, you would need to spend almost two and a half million dollars just to accrue the points!
Martin: it’s almost a wealth distribution thing that’s going on. So those people who fly a lot will get lots of benefits. Those people who don’t fly often, perhaps are using their credit cards to collect points, I suspect will end up paying a little more.
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Frequent Flyer Debacle (Sunrise Show, 20 Feb 2008)
October 17, 2008
A “free” trip isn’t exactly what you’re getting since surcharges, such as fuel levies, aren’t included, points out Clifford Reichlin, founder of the independent consumer site frequentflyer.com.au. Channel 7’s Sunrise show find Frequent Flyer points schemes may be taking us all for a ride.
Clifford: My pleasure.
Mel: These loyalty reward programs, we all probably think they are…maybe I don’t know. Are they better than they are? Are there some advantages to being a member?
Clifford: Well, I guess there certainly is an advantage to being a member, especially if you spend what you would spend anyway, but then you do get something for nothing.
However, there are always a couple of things which you should watch out for. It is important to make sure that you get value for your program and you don’t end up spending more than the value you get.
Kochie: How do you work that out though? That is the big disadvantage: where you spend might be taking a bigger margin and you might be paying over the odds for the product just to get a frequent flyer point. That doesn’t match up.
Clifford: That is right and that is the whole problem. It is really difficult to quantify the value of a point. I guess, as a rule of thumb, you shouldn’t spend more than you would spend at a merchant if it never offered a loyalty program.
Or if you are flying, you shouldn’t fly on a particular airline just to get the frequent flyer points. Always get the best value, because really, cash is king of the hill today.
Kochie: OK. So, it is icing on the cake. Just treat is as that; not the main driver or the…
Clifford: Absolutely. Yes.
Mel: What about redeeming points for air travel? I have got an email from Laurie:
“I have been saving my frequent flyer points for a couple of years to afford to take my family back to Ireland for a holiday. I have been logging on every day since October ‘07 for flights in September ‘08. I can’t get anything. I have now decided to purchase my tickets with another airline.”
Is that common?
Clifford: Yes, unfortunately that is very common. It does depend on the particular airline program. Some airline programs such as Virgin or Air New Zealand allow you to use your points to get any available seat.
Other programs, like the Qantas Frequent Flyer program is more difficult, because only a certain number of seats are allocated for frequent flyers. Once those seats go, even if there are other seats available, they are not available for frequent flying travelers.
Kochie: OK. Is that about to change though, because in May, apparently, Qantas frequent flyers will be able to redeem their points for any available seats on Qantas and Jetstar.
Clifford: Yes, Qantas has mentioned that. Nothing is really definite yet, but I expect what will happen is that the consumers will be given a choice where they can either use their points during the current scheme.
Where they can use the current rate to get a point with availability restrictions, or alternatively, they can use their points to buy any available seat at a higher cost, of course.
Kochie: Oh, OK.
Mel: Clifford, is it possible to list the best and the worst loyalty programs?
Clifford: I knew you were going to ask me that question. It is really hard to give specifics because things are different for different individuals and also different states you live in.
But as a rule of thumb, I can give you some guidelines as to what to look out for in a good program and a bad program. I guess in a good program, probably the most important thing is to make sure that the reward you get has value to you and is something which you can use.
There is no point in getting consumer goods if you don’t want consumer goods or getting frequent flyer points if you actually can’t get to travel. So that is one thing to look out for.
The other important thing is what I call the earn rate, which is the amount of frequent flyer points you get per dollar spent or per kilometer traveled. Always try to go for at least one point per dollar spent.
I guess another key feature of a good program would be a low burn rate, whereby it doesn’t require many points to actually travel.
Kochie: OK.
Mel: [crosstalk]. That was sort of what you said before, wasn’t it?
Kochie: How do you know if you are in a dud program?
Clifford: I guess you are in a dud program if you get rewards that you can’t use or you are not rewarded for all your spends. What often happens is you might have a credit card, where your rewards are kept at a certain point and off that point actually earns you nothing.
Kochie: Or you get a point on a credit card and then they have a conversion to the airline, which is always lower, and you think, “I thought I was getting the same level of points.”
All right. If you can’t name the best ones, what one are you on?
Clifford: I am with Westpac Altitude program. Why I like that program is it does give you a choice. You can use your points either to purchase travel directly or to convert them into Qantas frequent flyer points.
Kochie: OK. Terrific! OK, thank you, Clifford, for that.
Clifford: No worries.
