The good news in Qantas' horrific results

One section of Qantas' business is yet to make headlines, but is consistently delivering some very strong results for the airline.

Believe it or not, there’s some good news buried under all the red ink in Qantas’ latest round of half-year results.

Sure the airline may be priming to cut 5000 jobs, freeze wages and axe services in what it deems to be unprofitable routes (Qantas sidesteps a terminal decline, February 27). But it’s also seen strong, continued growth in its popular Frequent Flyer program. Not just in subscriber numbers either -- it’s making a tidy profit from this program.

And to put that growth in perspective, it’s far outpacing that of other rival airline membership programs. This result is impressive in itself given that unlike other free programs, Qantas’ actually requires a $90 joining fee.

So why does this matter?

It was reported earlier this year that Qantas is investigating floating a portion of the program to generate the extra cash needed to turn around its business. Back then it was valued at around $3 billion.

But this figure is only set to increase as Qantas continues to diversify its Frequent Flyer offering. It’s already partnered with retailers to offer consumer points with purchases. The next step lies in turning every Frequent Flyer’s membership card into a debit card, a process which Qantas started last year with the rollout of its revitalised membership cards.

In a sense, Qantas’ loyalty program is the airlines' ‘get out of debt free card’. But buyer beware: as this earlier report notes, those purchasing the program should be alert to the fact that it's tied to airline seats and upgrades which will always remain at Qantas’ discretion.

The other point is that the Frequent Flyer program is a customer data goldmine. And by expanding the reach of the program into retail purchases and now crediting, Qantas has effectively expanded the amount of data it receives from its members.

Here’s what the airline current collects from its Frequent Flyer members:

(Source: Qantas)

It's difficult to measure how effective Qantas has been in using this data to improve its business.

What is apparent however is that Qantas’ loyalty program is the airline’s diamond in the rough. How it will be harnessed to assist in its recovery will be something to keep an eye on over the next couple of years.

Got a question? Ask the reporter @HarrisonPolites on Twitter.

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