What's The Point?
Sydney Morning Herald
Wednesday September 12, 2001
Ever tried to book a flight on your frequent flyer points but found it near impossible? Leeanne Bland examines how to get the most miles from the revamped Qantas rewards program.
Qantas frequent flyer members will be sitting pretty this week as they tot up their rewards points ahead of Saturday's changes and figure out smart ways to benefit from them.
For loyal customers of Australia's second-biggest domestic carrier, Ansett , the situation is less certain. Its fate hangs in the balance as Qantas and Virgin Blue negotiate a carve-up of the stricken airline.
Any rescue package is likely to give the Flying Kangaroo a monopoly of the skies, which bodes ill for prices. It already holds 54 per cent of the domestic market, while newcomer Virgin Blue has 7 per cent.
Yesterday, the Australian Competition and Consumer Commission (ACCC) confirmed it would consider any proposal from any parties to allow Ansett to continue to operate in the immediate future, including honouring its tickets.
At the time of going to press, it was unknown what would happen to the frequent flyer points held by Ansett's 2.5 million Global Rewards members.
However, the Federal Government and the ACCC are likely to push for Qantas to honour Ansett's rewards program, although the value of points may change.
But, under a worst case scenario, where no rescue package is forthcoming, Global Reward points are likely to be worthless.
The airline's alliance partners, United Airlines and Singapore Airlines have been inundated with inquiries from Ansett account holders wanting to redeem their points.
Meanwhile, Qantas Frequent Flyer members will be interested in whether this week's changes leave them better or worse off. A lot depends on whether Virgin's cut-price flights will remain on offer in the wake of this week's massive shake-up.
Rewards schemes, as everyone knows, are a smart way of hanging on to fickle customers who are easily seduced by discount prices.
The main changes to the Qantas program are that points will be awarded on miles travelled rather than kilometres, each flight will carry a guaranteed minimum 1,000 points, and points will be eligible for upgrades on international flights. And provided you add or redeem points from your account at least once every three years, the points won't expire. But will you be better off under the new system?
Like most of the rewards schemes, it depends on how often and where and when you travel.
The new one-point-per-mile calculation translates to one point per 1.609 kilometres, according to the Qantas Frequent Flyer membership benefit booklet.
Previously, those on full economy tickets earned one point per kilometre, but discount ticket-holders earned less. Now both will earn the same number of points. Business-class travellers will earn 1.25 points per mile, while first-class passengers will earn 1.5 points per mile. Those who have higher membership levels will earn more points per flight. Silver will earn 25 per cent more points, gold 50 per cent more and platinum 100 per cent more.
For example, under the new system, bronze members travelling discount economy class from Sydney to Melbourne will receive 1,000 points even though the flight is only 440 miles.
If a gold member flies business class, he/she will receive the minimum points guarantee of 1,250 (without the guarantee, it would be only 770).
Clifford Reichlin, director of the Melbourne-based frequentflyer.com.au, says the Qantas changes are an attempt to compete with Virgin Blue.
``They are trying to reward flying locally," he says. ``You get more points for flying locally and less points to fly overseas.
``Also, frequent flyers can now use their points to upgrade on international flights."
This is an important change and may represent a better way of making the most of your points. According to the benefits guidebook, 50,000 points will get you an upgrade to business class on a discount economy ticket to London. This may be better than using them for two Sydney-Melbourne return trips, for example (which will cost 40,000 points under the new system). Equally, the London upgrade may be preferable to flying to a destination, such as Hong Kong, which will cost 50,000 points.
An upgrade to business class to Manila will set you back 25,000 points, which may be better than using 20,000 points for a Sydney-Melbourne trip.
And only 8,000 points will be needed to upgrade to business class on a discount economy ticket to Fiji or New Zealand. The 8,000 points won't get you anything in the way of free flights, now that one-way reward flights are no longer on offer.
Reichlin says it is especially worth considering using points for upgrades rather than for domestic travel, particularly as Virgin Blue's entrance means you can now get discount tickets for a fraction of the full economy fare.
However, everything now depends on what happens with the Ansett rescue package, and whether competition is reduced in future.
But if you are determined to use the points for a free flight, it may be worth considering flying internationally instead of domestically.
A return flight to Melbourne costs 20,000 points, compared with a return flight to Singapore which costs 30,000 points.
It is important, however, to assign a dollar value to your points, Reichlin says: ``Points are currency."
This may be something as simple as comparing how many points are required to take advantage of a reward versus how much it would cost if you had to pay for it.
``Using points for tours and car rentals is a very inefficient way to use them," Reichlin says.
``Using 20,000 points for one day's car rental is crazy. You would be better off using a credit card and rent the car and accrue the points to your frequent flyer program."
Of course, it doesn't matter how many points you have, they are not much use if you can't use them to get on a flight.
Ian Carew-Reid, chairman of the Australian Federation of Travel Agents says feedback from clients shows that reward flights are difficult to book.
It is an issue that the Australian Competition and Consumer Commission (ACCC) has taken an interest in and continues to monitor.
In response to the changes to the Qantas scheme, announced in March, the ACCC's chairman, Professor Allan Fels, said the changes had streamlined the structure of the Qantas Frequent Flyer program.
But he said that the program continued to carry restrictions on the accrual and redemption of points.
``It is important that advertised rewards are available, and that the restrictions imposed on the redemption of those rewards are made clear to consumers," Professor Fels said.
``Qantas has taken positive steps to improve such disclosure. Complaints made to the ACCC indicate consumers are concerned that the promotion of frequent flyer programs focuses on the trips, gifts or special deals a member can obtain, with little mention of the restrictions imposed by the terms and conditions of these schemes.
``The onus is on the airlines to clearly disclose the terms and conditions governing these programs, and to make consumers aware that maximising the commercial revenue of a flight means frequent flyer redemption seats will be limited in availability," he said.
Fare trade
With only a few days to go before the changes to the Qantas program take effect, it is not a bad idea to review your flying plans for the next 12 months.
``For example, a Sydney-Bali business class return trip will cost an additional 40,000 reward points if booked after September 15," according to the Internet site www.frequentflyer.com.au
``As you can book up to a year in advance, there may be significant benefits in booking your award travel before 15 September," it says.
The site carries a calculator comparing the number of points required for award travel for bookings made before and after 15 September 2001.
While some flights will cost more points, others will be cheaper.
For example, a return economy flight from Sydney to London will cost 110,000 after the changes, which is 20,000 fewer points.
Equally, a Sydney to Tokyo trip will drop from 80,000 points to 50,000 after September 15, the Web site says.
But the real slug will be felt with some domestic flights, as many of the points required are increasing.
For example, a return trip from Sydney to the Gold Cost will increase by 3,000 points to 20,000 points. The Sydney to Coffs Harbour route will increase from 9,000 points to 20,000 points.
The flipside to this is that more points will be earned when people fly on this route. While a discount Sydney-Coffs Harbour ticket would have earned only a few hundred points before the changes, they will now earn 1,000 points.
Fortunately, not all the frequent flyer reward flights will require more points. For example, the Sydney-to-Hamilton Island trip will reduce from 30,000 points to 20,000 points.
Similarly, Sydney to Launceston will be cheaper by 5,000 points to 20,000.
Misguided loyalty
It seems like commonsense, but people can be so driven in their quest to earn more frequent flyer points that they don't bother to shop around for cheaper fares.
A better option than choosing only ever to fly with the one airline because you are a member of its rewards program is simply to book the cheapest flight even if it is with another airline. The money you save on the cheaper flight will come in handy for flights taken later. This is especially a good idea when you consider how difficult it can be to redeem points for flights.
Ian Carew-Reid, chairman of the Australian Federation of Travel Agents, says his clients have expressed dissatisfaction with their ability to book flights with their frequent flyer points.
Some clients will now pay a travel agent $50 or $100 to find a flight for them, he says.
``Often they have a devil of a time finding the flights."
David Huttner, head of commercial with Virgin Blue, says the benefits of reward programs are overrated.
People are paying for their free flights, whether they realise it or not. ``Anyone who does the maths will find frequent flyer points are a rip-off.
It takes 12 Sydney-Melbourne flights to earn a free trip, according to www.frequentflyer.com.au
Even if Qantas's new program manages to halve the number of flights required, Huttner says people are still better off flying with Virgin Blue.
``After two or three flights, they will earn a free round trip with the savings they make," he says.
Logging onto the Web sites of Virgin Blue and Qantas to book a fare at short notice a Sydney-Melbourne return day trip in four days' time brings some interesting results.
The cheapest Virgin Blue fare is $308 (or $338 depending on the time of morning you travel), compared with the Qantas fare of $500.
One would have to take only two or three trips to save enough money with the
Virgin Blue fare to cover the cost of an additional flight better value than 12
Qantas trips for a reward flight. However, a hike in airline tickets across the
board is expected given this week's shake-up.
WHAT IT COSTS TO FLY ONE WAY: BUT COMPETITION UNDER THREAT
Sydney to Adelaide Brisbane Canberra Gold
Coast Hobart Melbourne
Qantas Full economy $449.24 $363.00 $198.00 $363.00
$455.40 $330.00
Lowest general $275.00 $198.00 $143.00 $198.00
$308.00 $220.00
Lowest internet $110.00 $99.00 $77.00 $77.00
$143.00 $99.00
Virgin Blue Full economy $244.00 $170.00 NA * $170.00
NA * $184.00
Lowest general $157.00 $97.00 NA $107.00
NA $124.00
Lowest internet $109.00 $77.00 NA $77.00
NA $77.00
Source: Infochoice 6/9/01
Virgin will fly between Launceston and Melbourne from Dec. Virgin fly between
Canberra and Brisbane.
© 2001 Sydney Morning Herald
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