Frequent Flyer points ‘whisperer’ Steven Hui says Singapore trumps Qantas on fees

Qantas’ frequent flyer overhaul is good news for travellers, but doesn’t match changes made by big rival Singapore.

Qantas’ frequent flyer overhaul is a good development for air travellers but falls short of similar changes made by Singapore Airlines, according to “points whisperer” Steven Hui.

Mr Hui, founder of points advice website iflyflat.com.au, said that while customers will be happy with Qantas’ decision to charge lower fees on frequent flyer flights, its fees aren’t as low as they are at Singapore Airlines, where fuel and insurance surcharges were cut from all redemption award tickets as part of an overhaul last year.

“Singapore Airlines did something similar in March last year where they dropped their fees drastically,” Mr Hui said.

“Qantas has just reduced their fees, they haven’t really slashed them.”

Still, he said the overhaul was a smart move by Qantas, because consumers don’t want to be hit with fees when redeeming frequent flyer points.

“It allows people to at least get a cheap flight. And if you’re getting a cheap flight, you don’t really care about whether its economy or business,” said Mr Hui, a former Macquarie Goup accountant.

“The more flights you book using points, the more you are going to want to earn points.

“By Qantas dropping the number of points to fly economy, and also dropping the taxes to fly economy, they are going to encourage more people to use their points to fly and I think by flying it will make more people happy.”

Qantas announced the number of points needed to redeem some frequent flyer flights would increase, but that the fees charged in addition to the points would be reduced by up to 50 per cent.

The airline also announced that 1 million reward seats would be added to flights operated by Qantas and new airline partners to popular destinations.

The announcement prompted shares in the company to drop as much as 3.4 per cent before closing down 1.6 per cent at $5.43 each.

“The market would see that as them having less seats to sell,” Mr Hui said.

“But Qantas makes lots of money through frequent flyer points so if people collect less points they make more money over there anyway.”

For the first-half this year, earnings generated by Qantas’ loyalty program grew 4 per cent on the prior period to $175 million, compared to 1 per cent EBIT growth in the company’s domestic business, which generated $453m.

Meanwhile, earnings before interest and tax generated by the company’s international business plunged 60 per cent to $90m, while Jetstar earnings fell 20 per cent to $253m.

Under the changes announced on Thursday, up to 10 per cent fewer points would be needed for an international economy “classic reward” seat, but premium seats will cost up to 15 per cent more in points.

An economy seat from Melbourne to Los Angeles that currently requires 90,000 points and costs $513 in fees, will now cost 83,800 points plus $393 in fees.

Points needed for a premium economy seat on the same flight will increase from 144,000 to 162,600, but fees will fall from $793 to $603.