Qantas unveiled changes to its frequent flyer program yesterday in Sydney in an effort to address recurring issues with the loyalty program. The overhaul will cost Qantas AUD$25 million and will result in cheaper redemption charges for economy flights, increased seat availability, and reduced carrier charges.
As reported in Simple Flying earlier this week, more than 12 million people are members of Qantas Frequent Flyer and the sheer numbers were placing some areas of the program under pressure
Seat availability (or the lack thereof) has been a running problem for Qantas and causing significant customer dissatisfaction. The changes announced yesterday are designed to tackle this.
Lots of positives in the overhaul
Most Qantas customers will reap benefits from the changes. The key wins for customers are:
1. Fewer points needed: The number of points needed to redeem an economy classic rewards seat will fall by up to 10%. As the Sydney Morning Herald notes, this is a plus for the majority of frequent flyer members who only fly economy, accrue a ‘modest’ amount of points, and have had problems using those points when they wanted to use them.
2. More reward seats: There will be an extra one million reward seats available annually across Qantas and its partner airlines (including Air New Zealand, KLM, Air France, China Airlines, and Bangkok Airlines). Critically, availability will free up over busy periods (such as school holidays) to popular destinations like Singapore and Los Angeles. Additionally, reward seat availability will increase by up to 30% in the Qantas premium cabins.
3. Surcharges decrease: Carrier charges will decrease by up to 50% on international bookings. Qantas claims this will result in an average saving of AUD$200.
4. New points club: A new points club will be created and aimed at customers who earn the majority of their points via Qantas partners. This can result in a high points balance but low status balance, and therefore not seeing much recognition from Qantas when these customers do fly. There will be two tiers and the entry level balance on the first tier will be a 150,000 points. Qantas will start offering Qantas Club lounge access and bonuses status credits to these customers.
5. Lifetime Platinum tier: Recognising the hard core pool of flyers who spend more time on Qantas than at home, Qantas is creating a lifetime platinum tier. But you’ll need to accrue 75,000 status credits to get there. That’s about 130 fullfare business return trips between Sydney and London, a big ask for even the most committed road warrior. If I flew business return to London every two months it would take me nearly 22 years to make lifetime platinum!
And the negatives?
There’s only one big drawback to yesterday’s announcement. Booking a rewards seat in premium economy, business or first class will cost up to 15% more.
However, this is counterbalanced by increased availability. Premium cabin reward seat in-availability on international flights has historically been a big issue. This problem should ease somewhat with the 30% increase, although demand will probably still exceed supply.
The increase means the cost of a business class seat from Los Angeles to Melbourne will rise from 192,000 points to 216,800 points. The cost of a first class seat on the same route on a Qantas A380 will rise from 288,000 points to 325,600 points.
David Flynn of Australian Business Traveller told The Australian newspaper yesterday that there was a high likelihood that this change would annoy some Qantas customers, particularly those who prefer to fly premium.
As the Sydney Morning Herald said, this “noisy minority” who fly often and fly in the good seats will no doubt complain, but Qantas needed to address availability issues for the quiet majority. However, in fairness to them, it is the noisy minority who contribute the most to Qantas’ revenue.
Qantas also notes there are points earning facilities with over 300 partners, as well as opportunities exist to rack up substantial points balances via Qantas branded credit cards and bonus offers. The 15% increase in redemption costs for premium cabin seats might cause a few grumbles, but is unlikely to slow the demand for them.
So far, 2019 has been a big year for Qantas. The frequent flyer program changes are a long overdue overhaul. Plus, the changes will be for the benefit of the majority of Qantas customers.
As a regular user of the airline and active member of the program, lack of reward seat availability and high carrier charges is a real irritation. It needed sorting out. Like a government keen on progressive taxation, the changes will affect a minority who can generally afford to carry the burden.
As Qantas keeps moving forward, it will be interesting to watch what they do next.