Monday, July 21, 2008

Qantas Frequent Flyer Any Seat change - a 1 cent slap in the face

I have been fuming about the recent changes to the Qantas Frequent Flyer program. In classic Qantas speak, they have announced a revolution in their program through the launch of Qantas Any Seat Rewards. Rather than limiting the number of seats available for purchase with frequent flyer miles, they split the seats that can be purchased into two types.

There are "Classic Award" seats. These are seats available under the same fixed points basis - 64,000 for one way to London Economy. How many of these are available on any particular flight is anyone's guess.

Then there is the new Any Seat Awards which do not limit the seat availability (other than number of seats on the plane) but it is price on application. Qantas will only tell you the Any Seat points price once you call them. Shocking stories are emerging. Over at frequentflyer.com.au they are running a competition for the "Most Expensive Anytime QFF Award". A couple of examples.
  • Perth to Alice Springs under classic is 16,000 points. Under Any Seat 203,000 points; 1169% premium;
  • Perth to Sydney to LAX to New York return in first class under classic is 384,000. Under Any Seat 2,459,244 points. A premium of 540%; and
  • Sydney to Frankfurt business return in June 2009 (a full year away) is 256,000 under classic. Under Any Seat 1,137,133. A premium of 354%.
Only Qantas could have the outrageous gall to spend millions on marketing to promote as a benefit to me a program designed to increased the cost of frequent flyer seats.

One of the people posting raised a fantastic example of Qantas using this program to rip off consumers. User "platy " tracked a Honolulu to Sydney one-way flight departing in a month's time for 128,000 points. This is a flight that can be bought for $400 inc taxes. That means 320 points per dollar. Eight times the usual redemption rate. On a business class trip to the US I usually collect around 42,000 points (including status benefits) at at cost of around $12,000. That means I am getting about 3.5 points to the dollar. If it costs me 320 points in the dollar to get an Any Seat reward then Qantas is valuing my loyalty at a reward of about 1.09 cents in the dollar. For every dollar I spend they want to reward me with a 1% rebate. I suspect that we are seeing the end of value in the Qantas Frequent Flyer Program.

In a world where they consider to reward loyalty with a 1% discount then there is no longer any point balance value to loyalty with Qantas. There maybe other value drivers for customers such as lounge access but points are no longer a reason to be a QFF.

If you think it is just bloggers that are mad then check out the rant by Paul Sheehan in the today's Sydney Morning Herald under the heading "Qantas Burns a Precisous Resource" . He concludes that
Qantas enters the oil shock era as one of the world's strongest, largest and best-managed airlines. But the last four times this once doggedly loyal Qantas frequent flyer went to Europe he flew on Air China, Etihad and Finnair
Note to Qantas and Qantas Frequent Flyers. Singapore Airlines has been running an Any Seat Reward style program for years. The difference they tell you up front the price for redeeming a seat not allocated to frequent flyers. The difference is simply double.

5 comments:

Carl said...

Hi Tim,
Yes Paul Sheehan telegraphed this latest punch back in Feb (I think)
http://www.smh.com.au/news/opinion/frequent-fly-in-qantas-ointment/2008/02/03/1201973735201.html

Just another example of frequent arrogance for flyers and another reason why I now keep all points in my Amex account so I can also send them to SQ instead.

Tim Hughes said...

Carl

Thanks. I have read previously that loyalty points are the number one form of currency on the planet (in terms of units). With no central bank to control "production" or manage "interest rates" then hyper inflation is to be expected. What makes me mad is when the airline devalues the currency then sells it as a benefit. In the end they kill the loyalty generating elements of the program. I go to the US twice a year and am forced to fly Qantas as a result. However I put all of my European business through BA, SQ, CX and VS even though it costs be status points miles on Qantas.

Carl said...

I couldn't agree with you more Tim.
Some have suggested to me in one sense it might go close to bait and switch.

We participate in the buy side of the program with an understanding of a subsequent sell side only to have that part of the equation changed through devaluation (or hyperinflation) or increased availability restrictions. Can you imagine what the availability restriction on the classic seats will be lie now?

I imagine QF knows what many travellers will do with our loyalty generating elements if SQ ever get on the pacific route.

Of topic. loved your Foyal FLush post. Havent seen one in the wild but can imagine the view.

Tim Hughes said...

I am doing the numbers on whether or not I should move my oneworld primary points collection from QFF to either BA or Cathay.

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