Frequent Flyer failure

Unless you fly often, frequent flyer points won’t get you very far.
 
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03.Chasing points

Frequent-flyer-points_WEBCalculated to confuse

How many frequent flyer points you get from flying depends on:

  • Whether you’re flying on the member airline or its discount brand or partner airline.
  • Whether you’re sitting in economy, business or first class.
  • Point accumulation is also determined according to whether you’ve previously spent enough on airline tickets to make it into a silver, gold or platinum program.
  • How many points you earn by using your credit card or numerous other transactions.

But it’s not just points you’re after. You also need status credits. The more you fly, the more status credits you get, and it’s the status credits that pave the way to silver, gold or platinum status.

As you move up, your point-earning power increases, but only if you buy tickets often enough – and fly far enough – to maintain your status. Status credits can only be earned by flying – and they disappear after 12 months.

On the face of it, Virgin Australia pulls slightly ahead of Qantas in its status credit offering. Virgin offers fewer credits for comparable trips (400 compared with Qantas’ 480 for a return Sydney-London trip in business class), but also requires fewer credits to get into a status credit program and start earning more points.

The common thread is confusion. The more you spend, the more you get, but the value of what you get is tricky to determine.

Points on the ground

Of course, there are many ways to collect points other than flying. Qantas, for instance, has more than 400 retail partners. But whether the points are worth the price is another question.

In a 2011 promo, consumers were offered two Qantas Frequent Flyer points per dollar spent on a range of Optus services.

“I would never convert points to purchase – definitely not good value,” says Naomi Stephens. Among the special offers in the Qantas Frequent Flyer store last month was an LG 32’’ LCD TV for 86,500 points and a Coleman 58L Xtreme Cooler for 19,700.

If you flew Qantas Sydney-LA return five times as an entry-level bronze member you’d still be 11,590 points short of the TV, and 4718 points short of the cooler after a single round trip. (We found the products for $439 and $139 respectively at retailers.)

It’s the same story with Virgin. An Akai DAB digital radio was recently going for 15,900 points in the Velocity store, and you could throw in a Breville 34L microwave for another 34,900 points. If you flew Virgin Australia Sydney-LA return twice (discount economy) you’d still be 910 points away from the radio and could only get the microwave if you made the return trip four times. (CHOICE found the same products for $72 and $129.)

Nevertheless, Qantas Head of Airline Loyalty, Stephanie Tully, tells us the flying kangaroo “benchmarks goods sold versus other loyalty programs in the market and we believe we have a competitive offering”.

Virgin Manager of Corporate Communications Emma Copeman argues “our redemption pricing is competitive and represents real value”.

Card tricks

As we highlighted in our report on credit card-based frequent flyer miles last year, you’d have to spend big dollars on your credit card every month and pay the balance in full without fail to make it worthwhile.

Our calculations showed that a $5000-per-month spend on your credit card would earn you a maximum of about $1000 worth of points a year on either Qantas or Virgin in the best-case scenarios.

If you spend less than $1000 a month with your card, in many cases the net value of any frequent flyer points will be eaten up by fees.

CHOICE verdict

Your points won’t buy you much with either the Qantas or Virgin programs unless you fly a lot. And with stiff competition for passengers, you may save more money than what the points are worth simply by buying the cheapest ticket. Unless you fly often, don’t let the pursuit of frequent flyer points dictate your itinerary. Competition is reportedly on the wane and deep discounts may be harder to come by, but for casual travellers, any significant savings on a ticket price likely beats the value of flyer points. Book the cheap seats and use the built-up savings to splurge for premium ones.

 

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