Juggernaut Qantas frequent flyer scheme facing Senate scrutiny

The profit-rich scheme has faced increasing complaints that it’s more about making money than rewarding loyalty.

The Qantas frequent flyer program has grown significantly under the management of Qantas Loyalty CEO Olivia Wirth. Picture: Adam Yip

The massive growth of the Qantas frequent flyer program is making it harder for members to use points for international flights even with a big increase in classic reward seats.

With more than 15 million members, the program is considered one of the most successful airline loyalty schemes in the world, generating $1.3bn in profits over the last four years.

In the year to June 30, 155 billion points were redeemed, out of a total of 175 billion points earned.

But its enormous membership base has meant coveted reward seats are becoming harder to come by, even with five million currently on offer by Qantas.

The airline claimed one in 11 passengers flew on a reward seat last year but it was not clear how many of those were on international flights as opposed to domestic.

The Champagne Mile publisher Adele Eliseo said when searching for a reward seat on the Qantas website, users were first presented with “points plus pay” pricing, which provided a much lower value return on points.

She said this was creating a perception members needed many more points for flights than they did a few years ago.

“So you might see a flight from Sydney to London where Qantas assigns a value of about half a cent per point and then they display the pricing in those points. That’s where people are seeing a million points to fly business class and we get a lot of confused people,” Ms Eliseo said.

“It’s a bit tricky of Qantas because you actually need to toggle to search classic reward seats to get those cheaper redemption prices.”

She said it was easy enough to burn through Qantas points in other ways — such as by paying for fuel or groceries, or buying gift cards.

But she said they were “low value redemptions” because they effectively priced points at about half a cent, compared to business or first class upgrades that valued points at 5c each.

“I think at this point in time, you have to be so savvy to get those maximum value redemptions,” said Ms Eliseo.

“What we’re seeing is quite a few enterprising frequent flyers who’ve started their own businesses that charge a subscription and send an alert when frequent flyer seats are released. “Or you can pay for a special algorithm that will search the airline inventory for you so it’s getting harder and harder and people are needing to really educate themselves to stay ahead of the pack.”

Lounge access is one of the perks of the Qantas frequent flyer program, which now has more than 15 million members. Picture: Supplied.

A Qantas spokesman said the number of points needed for a classic reward seat had not changed in four years, despite increases in airfares in the same period.

“We know how much members value the ability to use points for flights and demand for them is high,” the spokesman said.

“That’s why since international borders reopened we’ve increased reward seat availability on our international network by 50 per cent.”

However Ms Eliseo pointed out that redeeming points with Qantas’ partner airlines had also become more difficult, with Emirates releasing much fewer first and business class seats as reward seats for Qantas frequent flyers.

Furthermore, carrier charges and taxes had increased quite significantly making that “free” seat to Europe rather expensive, Ms Eliseo added.

“It can now cost almost $2000 to redeem a one-way first class seat to Europe across two segments with Emirates using Qantas points,” she said.

“In contrast Qatar Airways have been blocking reward space for Qantas even though they’re both members of the Oneworld alliance. You can quite easily access Qatar seats through Virgin Australia’s Velocity program, but you can’t through Qantas.”

As part of its inquiry into the federal government’s decision to deny Qatar Airways more flights into Australia, a Senate Committee planned to examine the Qantas frequent flyer program.

Shadow transport Minister Bridget McKenzie said loyalty schemes played a big part in the affordability and competitiveness of domestic and international air travel.

“Any assessment of the impact of a decision such as the Qatar Airways decision will also have to include an assessment and an understanding of the frequent flyer programs and the competitive nature of them too,” said Senator McKenzie.

Qantas declined to comment on the inquiry’s plan to examine its frequent flyer scheme which earned much of its revenue from points-earning credit cards.

In the 2023 financial year, 250,000 new cards linked to the program were acquired by consumers, up 65 per cent on the previous 12-months.

As a result more than a third of all consumer spend on credit cards, was through Qantas point-earning cards.