Qantas is spending $25 million on the biggest ever overhaul of its frequent flyer program, cutting fees for its 13 million members and making it easier to cash in points for economy flights.
Australia’s largest airline is freeing up an extra one million seats – including to high-demand international 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 economy reward flights by as much as 10 per cent and cut all carrier charges – the extra costs associated with points bookings – by up to half.
An economy flight from Melbourne to Los Angeles, for example, will require 6,200 fewer rewards points – a 6.8 per cent reduction – and fees will be drop by $120, or 23.4 per cent.
The points reduction for economy rewards flights is effective immediately.
It’s not all good news, though, with premium upgrades and business class seats set to require more points from September 18 – though a reduction in fees will still apply.
Flying first class from Melbourne to Los Angeles will require an extra 37,600 points – a 13 per cent increase – but fees will be reduced by $240, or 25.4 per cent.
“It’s the first time we’ve changed (the upgrades system) in 15 years… and we still think it’s value for money,” chief executive Alan Joyce said at a media conference at the Sydney Cricket Ground.
New airline partners with whom Qantas Loyalty members can use and earn include China Airlines, Bangkok Airways, Air France, and KLM Royal Dutch Airlines.
Mr Joyce said Thursday’s announcements followed feedback from customers on a perceived lack of recognition from the 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 boss Olivia Wirth also revealed a new two-tier ‘Points Club’ she said would particularly benefit “high-buying” rewards members who may not fly often but spend money through Qantas-affiliated partners.
Ms Wirth said the majority of the top 1,000 earning frequent flyer accounts were people who earned their points through activities on the ground through shopping at affiliated retailers including Woolworths, booking accommodation and hire cars, and using linked credit cards.
The Points Club will be launched later in 2019 and will feature two tiers based on members passing an annual points-earned criteria.
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.
Qantas Loyalty was founded in 1987 with about 40,000 members.
Mr Joyce said among the most popular uses of points when the system was founded 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 shares dropped as much as 3.4 per cent to $5.33 following the announcement but recovered to $5.41 by 1350 AEST