Loyalty pays for grounded airlines

The lack of flying opportunities has not stopped frequent flyers earning and redeeming billions of points.

Qantas Loyalty chief executive Olivia Wirth addresses a crowd during a Frequent Flyer program conference at the Sydney Cricket Ground in June. Picture: AAP

Underlining why Qantas ­Frequent Flyers and Virgin Australia’s Velocity are the airlines’ best hope of pulling through the COVID-19 crisis, both programs have continued to attract high levels of engagement throughout the pandemic.

The activity has put the ­Qantas program on track for ­another $300m-plus profit in the 2020-21 financial year, eclipsing all other segments of the airline.

With flying largely unavailable, members have still managed to accrue millions of points through shopping and buying fuel. While credit card use has been down, Qantas’s wine club has boasted almost record numbers of cash sales to boost points’ balances.

Qantas Loyalty chief executive Olivia Wirth said typically members “stockpiled” their points for a holiday, and that ­behaviour had not changed.

With international travel banned, frequent flyers were ­instead redeeming points on trips closer to home and even on hotel stays in their own city.

“The most popular routes booked with points at the ­moment include Perth to Broome, Brisbane to Cairns and Sydney to Byron Bay,” Ms Wirth said.

The Qantas Wine Club has been one part of the airline that’s doing a roaring trade during the COVID crisis. Picture: Lindsay Moller

“We’re also seeing more points redeemed on Qantas hotel bookings for staycations and weekends away.”

Research on travel plans had revealed the notion of the “dream trip” was still well and truly alive, despite the pandemic.

When Virgin Australia went into administration in April with debts of $6.8bn, Velocity halted redemptions in response to overwhelming demand from members fearful of losing their points.

A Velocity spokeswoman said when points redemptions resumed in May they were inundated. “Velocity members have redeemed hundreds of millions of points on Virgin Australia domestic flights since travel restrictions started to ease,” she said.

“We’re seeing members choose to stay closer to home with most using their redemption flights to explore their home states.”

More bookings were also being made close to the date of flying, due to the uncertainty of the travel environment.

Daniel Sciberras, the managing editor of digital travel site Point Hacks, said the work airlines had put into diversifying their loyalty schemes and making them about more than just flying, was paying off for them in this “unprecedented period”.

Daniel Sciberras, managing editor at Point Hacks.

“Loyalty programs have been among the most profitable segments of airlines in recent years, and this year they’re likely to be the only part of the business that makes a profit,” he said.

Inquiries made to Point Hacks suggested people were hoping to use points accrued through this period of little or no flying on a big around-the-world trip.

“I think we could see fewer routes on offer when international travel does resume, which could make it harder for people to redeem points for the destinations they want,” Mr Sciberras said. “It’s one of the big uncertainties — what supply and ­demand is going to look like — not just for frequent-flyer seats but all airline seats.”