Two graphs that explain why Qantas is changing its Frequent Flyer program

It seems the changes to the airline's rewards program are not just about being 'fair', and have much to do with fares.

Qantas rattled the web when it announced last night that it will be changing the way it measures and tallies its frequent flyer point system.

The term “Qantas Frequent flyers” topped Google search trends this morning, the topic has started to trend on Twitter, and now the media is hounding Qantas for comment on why it’s changing the program.

With over nine million members invested in the Qantas Frequent Flyer loyalty program for the sake of funding free flights or seat upgrades, it’s easy to understand why so many people are interested in the matter.  

The airline is calling the new plan a “fairer system”, saying that it’s now allocating points based on how much you pay, rather than on how far you travel. But in effect, the airline is also using its frequent flyer program as a carrot to incentivise consumers into opting to pay higher fares for the same flight.

The ongoing war between Qantas and Virgin for rule over Australia's domestic aviation market has seen discount fares plummet to record lows. Meanwhile, non-discount fares have increased.


Graph for Two graphs that explain why Qantas is changing its Frequent Flyer program

It’s fair to assume that where possible, the vast majority of consumers would currently opt for a lower fare for an economy seat where given the choice, happily waiving the flexibility privileges incorporated into Qantas’s premium fare for economy seats on the same flight.

These typically include the ability to change the name of the passenger boarding the flight and the ability to reschedule the flight without losing the fare.

By repositioning its rewards program, Qantas is aiming to give its customers that extra incentive to pay higher fares, both for its economy and business class seats. For example, check out how the point allocation will change for flights between Sydney and Perth - and also note the various fares listed below. 


Graph for Two graphs that explain why Qantas is changing its Frequent Flyer program

The Frequent Flyer move is a bit of a gamble. As many on Twitter pointed out today, customers now opting for Qantas over Virgin often do so because of its rewards program. Tampering with it could sway some passengers towards Qantas’ rival.

It’s also one section of Qantas’ business that is showing strong signs of growth, which adds an extra layer of risk to this decision.

But if the move works as intended, it could help Qantas buck a trend of falling airfare prices and raise the amount of revenue from passenger fares without the airline having to add on seats and services.

Ultimately, the move hinges on one question: Would you pay a higher airfare to attain more points?   

What do you think? Leave a comment below or contact the reporter @HarrisonPolites on Twitter.