The do’s and don’ts of frequent flyer points

STEVE Hui spends a lot of time at the pointy end of the plane. Here he reveals the best and worst things you can do with your frequent flyer points.

IMAGINE booking an overseas trip this year that is completely funded by your reward points.

Reward travel is more popular than ever, with more than half the Australian population enrolled in the two major reward programs, Qantas Frequent Flyer and Virgin Velocity.

Between the two there are a range of choices (some smart ways, and some not-so-smart, to put it nicely) to redeeming your hard-earned reward points.

There are so many ways to use your points, but not all are equal in value. Here are three things you shouldn’t do with your credit and frequent flyer points this year.

1. POINTS AND PAY

Most airlines now have a “points and pay” option, where you can offset the price of your ticket by using points. You can easily burn all your points for just a small saving on your ticket, compared to booking a full-redemption “classic” reward flight with your points.

The key problem with “points and pay” is it is just a basic conversion of points into credit, at what I think is really low value, as 1 point equals just 0.7 cents.

For example, one my friends told me he was excited to book two SYD-MEL-SYD economy tickets to watch the Australian Open, so he used 110,000 points via “points and pay” to save $700.

To his dismay, I told him that if he had used his points smarter, using classic awards, he could have had two business class tickets for just 64,000 points. That’s flying better in business class with lounge access for 46,000 fewer points and saving more than $2000.

When I shared this story on LinkedIn, it gathered over 635 likes and 285,000 views.

Steve Hui (pictured) had to tell a friend that if he was more clever in spending his points, he could have flown like this for a lot less. Picture: Steve Hui

2. GIFT VOUCHERS OR PRODUCTS

Most of us have heard of the general rule that you shouldn’t spend your points on a toaster. But with the expansion of online reward stores, there’s now thousands more products to avoid.

It can be tempting to use your points on a new iPad or golf club set, but this is not the best value trade when compared to flying with your points.

Using points to get gift vouchers or products has a similar value as points and pay. Those new golf clubs will lose their swing when you could have redeemed a business class ticket with far more value.

Compare the numbers.

A pack of fitted golf clubs costs 218,00 points on the Qantas store, and are worth approximately $2500.

Business class flight from Sydney to Los Angeles costs 192,000 flying Qantas, and are worth approximately $6000.

3. FLYING WITH WRONG AIRLINE

Airlines offer unique strengths in their routes and reward partners. To get the best value for your points, get familiar with which airline is best for your destination.

For example, flying to London in business class return with Qantas (from Sydney, Melbourne or Brisbane) will cost 256,000 points and about $1581 in taxes.

But if you fly with Singapore Airlines’ reward program, it could cost you less — just 210,000 Krisflyer points and about $486 in taxes for the same trip.

Different airlines have different sweet spots. Some routes can have significant differences in points required.

In another example, Qantas requires 60,000 points for a one-way business class flight from Sydney, Melbourne or Brisbane to Hong Kong, whereas Cathay Pacific requires only 45,000 Asia Miles points.

The key is to be earning the right points in the first place so you can use them, as you can’t swap Qantas points for Cathay Pacific Asia Miles later.

So now you know what you’re doing wrong, here’s what you should be doing instead.

More than seven million people have signed up with Virgin’s Velocity program, while Qantas’ Frequent Flyer program has close to 12 million members. Picture: Evan Morgan

1. USE POINTS TO BOOK INTERNATIONAL FLIGHTS

Saving up your points and using them to fly internationally through a full reward fare (such as Qantas Classic Rewards) will dramatically increase the value of your redemption.

Booking seats using points as a full redemption is better value than using “points and pay”, or trying to get an upgrade.

Most people focus on trying to use their points for upgrades, but they are unaware that upgrades are worse than trying to win lotto, because it isn’t even random. Platinum and Gold members get first dibs.

2. FLY BUSINESS CLASS RATHER THAN ECONOMY

Flying business class with your points is the best way to maximise value and enjoy travelling in an experience of comfort.

For example, Sydney to Los Angeles business class return is 192,000 Qantas points (note: classic rewards, not points and pay) or 90,000 in economy.

But the business class ticket is worth more than $6000 and the economy ticket is only worth around $1500.

So you are getting four times more value for only double the points.

Flying business class on points is incredible value. You can work, rest and play on-board.

3. FAMILY POOL YOUR POINTS

Most airlines allow you to “family pool” or transfer your points between family members.

This can be a great way to gift your points to other members of the family. Pooling your points together into one account might allow you to get closer to your next trip. It’s also a great way to stop points from accidentally expiring.

If you’re travelling as a family with Virgin Australia, simply set up Velocity Family Pooling to earn points from one extra adult and up to four children.

It’s also a brilliant way to use points to surprise another family member. For example, fly the grandparents in business class. They deserve it.

Points expert Steve Hui is chief executive officer of iFLYflat.