Lukewarm landing for Qantas loyalty rewards revamp

Lukewarm at best is the way to describe the way Frequent Flyer experts see the Qantas revamp aimed at keeping more than 15 million members earning and burning.

Qantas CEO Vanessa Hudson is working to restore trust in the airline with a big change to the frequent flyer program her latest project. Picture: Britta Campion

The new Qantas frequent flyer product aimed at keeping more than 15 million members earning and burning points, has received a lukewarm reception from loyalty experts who praised its intentions but questioned its appeal.

Classic Plus rewards will give frequent flyers the chance to redeem mountains of points on over 20 million seats on Qantas international and domestic flights, progressively from July 1.

Although the typical price point for Classic Plus will be considerably higher than for Classic Rewards – which applies to a mere 5 million seats – the number of points will fluctuate in line with supply and demand, and airfare sales.

Unlike Classic Rewards, Classic Plus will only be available across Qantas operated flights and taxes and carrier charges will apply to an even greater extent in first and business class.

Qantas CEO Vanessa Hudson said the new product represented a $120m investment and demonstrated how they were listening to customers as the airline sought to rebuild trust.

“The one thing we have heard from members is that they value using their points for flight redemptions more than anything else,” Ms Hudson told The Australian.

“So hearing that, and doing what we did today which was launch Classic Plus, we think is an important part of achieving really satisfied customers, and driving greater engagement.”

Frequent flyer expert Adele Eliseo of The Champagne Mile said the initiative was desperately needed at a time when it was getting harder for members to use their points.

But she said the amount of points needed for seats, particularly those in premium cabins, was fairly high and would not please everyone.

“There’s certainly a valiant offer there for a subset of frequent flyers and that is people who are frustrated they can’t use their points, they want to be able to do so more easily and are perhaps willing to pay a bit more than those more savvy frequent flyers who are chasing that really high value per point,” Ms Eliseo said.

Frequent flyer expert Adele Eliseo.

Steve Hui of iflyflat.com.au agreed that only a certain group of frequent flyers would be in a position to “afford” Classic Plus leaving the rest to take their chances on Classic Rewards.

“I like that they didn’t tinker with the Classic Rewards program at all, so there’s no loss of value but it also means there’s no additional seats coming up for people who still want Classic Rewards,” Mr Hui said.

“Some customers might choose to go Classic Plus, which perhaps could mean less competition for Classic Rewards. I would expect Qantas would have done some data crunching on how many accounts have how many points, and are in a position to redeem those on flights.”

Point Hacks editor Daniel Sciberras was more optimistic about frequent flyers’ willingness to shell out more points for a Classic Plus seat, because it compared favourably to Qantas’ “points plus pay” product.

He said he often heard from readers, that they would be willing to pay a few more points than what was being asked by Classic Rewards, in order to get a seat on the flight of their choice.

“The gap between the Classic Rewards and points plus pay rewards was just huge — 108,400 points for a seat to Los Angeles on Classic Rewards and ten times that, or a million points for points plus pay,” Mr Sciberras said.

“So I think it was very important for them to create this category because they risked people becoming disengaged with the program, especially if other programs like Singapore Airlines’ KrisFlyer for example, did make more discounted seats available than Qantas was doing with its Classic Rewards.”

Qantas was confident frequent flyers would embrace Classic Plus, and the opportunities to redeem points on the seats of their choice on almost any route.

New Qantas Loyalty CEO Andrew Glance said existing reward seats were being snapped up in record numbers demonstrating members’ significant appetite for flight redemptions.

Mr Sciberras said it would be interesting to see how other airlines responded, particularly Qantas’ main domestic rival Virgin Australia which operated the successful Velocity program.

“They’re going to have to do something if the reward availiability for Qantas Classic Plus begins to far surpass Velocity’s reward availability, albeit even if Velocity seats are at a lower points cost,” he said.

“But their ability to act is quite limited because they don’t fly internationally that much anymore.”

Virgin Australia pointed to its own high levels of engagement and customer satisfaction with Velocity, after recording a 40 per cent uplift in members redeeming flights with points in the last year.