Qantas frequent flyers: Airline urged to give users more options

The airline is being urged to give users more options as it faces a crucial impediment in its target of $600m in profits.

Qantas is being urged to seek profit growth from its existing members. Picture: Getty Images

Australia’s small population poses the biggest challenge for Qantas as it strives to generate $600m in profits from its juggernaut frequent-flyer program.

On Point Loyalty consultant Evert de Boer said with 13 million members — or more than half the population — there was a risk the frequent-flyer program was nearing saturation point.

He said for that reason, Qantas would want existing loyalty members to engage even more with the program.

“Qantas has said they believe they can grow the loyalty sector to deliver $500m-$600m in profits in a couple of years,” Mr de Boer said.

“But with a population of just over 25 million people, they would know that growth isn’t so much from new members but ­extracting additional value from existing members and developing new services.”

With fewer than 10 per cent of points earned going unused, Mr de Boer said the best way forward for Qantas was to give members more options to earn points.

“High engagement is good ­because it means you have created a currency that’s attractive, portable and easy to use, and it will ultimately translate into customer equity,” he said.

“It means those customers will come back to you and they’ll be less price sensitive.”

As well as branching out into various insurance products, and an expected mortgage option this year, Qantas is preparing to launch its Points Club, as well as the much-anticipated Lifetime Platinum status.

Qantas CEO Alan Joyce and Chief Executive of Qantas's loyalty business Olivia Wirth with some of Qantas's flight crew at the SCG. Picture: Adam Yip

Membership to the Points Club would be restricted to people with at least 150,000 points earned from purchases other than airline seats, while Lifetime Platinum members would need to have accrued a mind-boggling 75,000 lifetime status credits.

Mr de Boer said other programs would be watching closely, with both Qantas Frequent Flyers and Virgin Australia’s Velocity considered “high-quality” offerings on the global scale.

“They may not be the biggest but they are making a valuable contribution to their airlines. They’re very profitable operating sectors,” he said.

A Qantas Loyalty spokeswoman said since making changes to the frequent flyer program last year they had seen record levels of engagement, with members earning and using more points than ever before.

“We are growing by around 250,000 members each year and we’re focused on engaging existing members by making it easier to earn points and redeem them on flights,” she said.

A survey of the world’s most valuable airline loyalty programs compiled by On Point Loyalty shows US carriers dominated the list, which was headed by Delta’s SkyMiles, worth more than an ­estimated $38.5bn. American Airlines’ AAdvantage was second, valued at $35bn, followed by United Airlines’ Mileage Plus on $30bn.

Singapore Airlines’ KrisFlyer was ninth on $7bn, and Qantas Frequent Flyers 15th on $6bn. Virgin Australia’s Velocity was ranked 32nd with an estimated value of $1.8bn.

On Point Loyalty used publicly available financial information to compile the list along with a range of variables for each program, including membership, partners and market dynamics.