Qantas is investing $25 million in what it says is the biggest overhaul in the 32-year history of its frequent flyer program, cutting fees and making it easier for passengers to cash in their points.
Australia’s largest airline says it will free up an extra one million seats to high-demand destinations for so-called reward flights, which customers pay for with points they have earned by using Qantas services and those of its partners.
Qantas will also reduce the number of points needed for domestic and international economy reward flights by as much as 10 per cent and cut carrier charges – the extra costs associated with points bookings – by up to half.
That points reduction is effective immediately.
It’s not all good news – with upgrades and business class seats set to require more points – but chief executive Alan Joyce says the changes will generally improve how Qantas Frequent Flyer’s near 13 million members are recognised and rewarded.
There will be a nine per cent increase in the points needed for an upgrade to premium, while a 15 per cent increase will apply to premium rewards seats.
These changes come into effect on September 18.
“It’s the first time we’ve changed (the upgrades system) in 15 years… and we still think it’s value for money,” Mr Joyce said.
Mr Joyce was also quick to quash rumours that Thursday’s announcement would feature changes to the airline’s Chairman’s Club, which is considered the top rung of Qantas status.
“We’re not not touching that – it will remain the same exclusive club it is today,” Mr Joyce said.
Mr Joyce said the changes followed feedback from customers on a perceived lack of recognition from the airline’s frequent flyer program despite their long-term loyalty.
“Some members find it hard to find the seats they want on the flights they want,” Mr Joyce said.
“A lot of on-ground spending but not much reward in the air.”
The additional one million rewards seats will therefore concentrate on peak periods such as Easter, Christmas and school holidays, and will feature popular routes such as Tokyo, Singapore and London.
Mr Joyce said the additional rewards seats could fill 2,000 Qantas A380 aircrafts over a year.
Qantas Loyalty, which allows customers to earn redeemable points by booking flights, shopping at retailers including Woolworths and using linked credit cards, was founded in 1987 with about 40,000 members.
Mr Joyce said among the most popular uses of the points system 32 years ago were grandfather clocks, ride-on lawnmowers and cassette players, before the option of purchasing flights with the rewards was introduced in the 1990s.
The program made a $372 million profit in the last financial year off revenue of $1.55 billion, about a 20 per cent contribution to the group’s profitability.
Qantas last month announced its first-ever so-called “points plane” from Melbourne to Tokyo, with all seats on the October flight reserved solely for those paying with frequent flyer points.
Qantas Loyalty boss Olivia Wirth said the airline had conducted extensive research before making the changes announced on Thursday.
“There’s a lot about the Qantas Frequent Flyer program that our members tell us they love, but there are also areas of the program that have increasingly come under pressure as a result of rapid expansion,” she said.
“What we’re announcing today is all about investing more into the heart of our program.”