Qantas signage at Adelaide Airport, Adelaide, Wednesday, May 8, 2019. (AAP Image/Bianca De Marchi) NO ARCHIVING
Qantas signage at Adelaide Airport, Adelaide, Wednesday, May 8, 2019. (AAP Image/Bianca De Marchi) NO ARCHIVING

Hidden sting in Qantas changes

COMMENT

This morning, Qantas unveiled a range of significant changes to its frequent flyer program.

On the face of it, many of the changes are very positive. Qantas has promised to open up more reward seats while also reducing its carrier charges on international flights.

Qantas Frequent Flyer members who earn stacks of points outside the plane will be rewarded via an exclusive "Points Club", and high-flyers can enjoy a lifetime of Qantas Platinum benefits once they amass an eye-watering 75,000 status credits.

But among all the fanfare, there will be some big losers from the new changes.

In many cases, economy class reward seats continue to represent a poor use of points and premium cabin redemptions will soon cost more.

ECONOMY REWARD REDEMPTIONS WON'T PROVIDE VALUE

From today, Qantas has reduced the points cost for some international economy reward seats by up to 10 per cent. Carrier charges (the accompanying fees you pay when you book with points) have also fallen by up to 50 per cent on international bookings.

While these are clearly positive initiatives, it's not enough to hide the fact that economy class reward seats generally represent poor value.

As an example, under the new pricing structure, a return economy reward flight from Melbourne to Los Angeles costs 83,800 points with accompanying fees of $285. That's a saving of 6200 points and $120 in fees from the previous award chart. However, with Qantas currently advertising sale fares on this route from $1079, you might be better off purchasing a fare outright instead.

Of course, it can sometimes make sense to use Qantas points at short notice or during peak travel periods when pricing is at a premium. But in many cases, there's better value to be had by aiming for a seat in premium economy, business or first class instead.

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REDEEMING FOR THE POINTY END WILL COST MORE

Qantas Classic Reward bookings and upgrade requests in premium economy, business and first class are set to cost more Qantas points from 18 September 2019.

Depending on the travel zone and cabin, Qantas Frequent Flyer members will need to fork out up to 15 per cent more in points for award seats. Those seeking a premium class upgrade will find themselves out of pocket to the tune of up to 9 per cent more.

On domestic business class routes, along with flights into New Zealand and selected South Pacific destinations, Qantas will apply no reduction in fees to lessen the sting.

For other international routes, lower fees will be applied in premium cabins, and in some cases will offset the increased number of points required for a redemption. However, that's not always enough to cover the shortfall for some long-haul routes, particularly in first class.

Qantas Dreamline
Qantas Dreamline

As an example, a return first class flight from Melbourne to Los Angeles currently costs 288,000 points and $943 in fees. From 18th September 2019, this will rise to 325,600 Qantas points and $703. When placing a conservative valuation of one cent per Qantas point, the saving of $240 is not enough to offset the additional 37,600 points required.

And while Qantas has promised to increase the number of selected international premium cabin reward seats by "up to 30 per cent" we don't yet know how this will be applied in practice.

WHY A FREQUENT FLYER OVERHAUL WAS NEEDED

Overall, however, these changes come as no surprise. An overhaul of Qantas Frequent Flyer program has been on the cards for a long time. Here's why.

Some years back, the prospect of 40,000 bonus Qantas points being offered on a new credit card was quite a compelling prospect. That's all changed. In 2019, a range of card providers are jostling to tempt Australian consumers with six-figure sign-on bonuses.

In fact, the credit card sign-on bonuses currently on offer in Australia are among the most generous in the world. There are also plenty of other easy ways to boost your points balance quickly, too (think 100,000 Qantas points for health insurance, or up to 15,000 Qantas points with a case of wine).

Australians are also getting more points savvy.

There's no doubt that shopping at the Qantas Store is a popular way for many Australians to burn points. However, the art of "points hacking" has become mainstream. As a result, more of us are using Qantas points for first and business class travel redemptions.

And while Qantas has traditionally levied some of the highest carrier charges or any airline, the demand for premium award seats clearly still impacts their bottom line.

Qantas needed to make a change and a string of recent airline program devaluations have paved the way for the airline.

 

Qantas Group CEO Alan Joyce and Qantas Loyalty CEO Olivia Wirth pose for a photograph at the Sydney Cricket Ground, in Sydney, Thursday, June 20, 2019. Qantas has announced a $25 million overhaul of its frequent flyer program, cutting fees and making it easier for passengers to cash in their points. (AAP Image/Dan Himbrechts) NO ARCHIVING
Qantas Group CEO Alan Joyce and Qantas Loyalty CEO Olivia Wirth pose for a photograph at the Sydney Cricket Ground, in Sydney, Thursday, June 20, 2019. Qantas has announced a $25 million overhaul of its frequent flyer program, cutting fees and making it easier for passengers to cash in their points. (AAP Image/Dan Himbrechts) NO ARCHIVING

 

In recent times, an unprecedented number of airline programs have hit consumers with unsavoury changes. These range from relatively conservative award chart devaluations (Singapore Airlines and British Airways), to the more extreme (think Malaysia Airlines and Thai Airways).

We've also seen Emirates axe Chauffeur Drive services on business and first class award bookings, while Velocity introduced carrier surcharges on award flights. Perhaps most worrying of all, leading US-based carriers (Delta and United) have abolished their award charts altogether, instead choosing to move towards a dynamic pricing model.

Given the many precedents in play, it's unsurprising that Qantas felt emboldened to enter the fray.

THE OVERHAUL QANTAS FREQUENT FLYER HAD TO HAVE

Beneath the fanfare, it's clear to see that some travellers will be somewhat worse off with the shake-up of Qantas Frequent Flyer.

However, the program remains as popular as ever, and my bet is that most Aussies will take the hit with minimum fuss.

And with a raft of significant changes announced today, let's hope that it's a very long time before Qantas award chart pricing comes under the microscope again.

 

Adele Eliseo is a professional luxury traveller and Qantas points collector. Whether it's tales from first class or the latest travel hacks, Adele shares her frequent flyer wisdom on her website The Champagne Mile



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