Frequent flyers left out in the cold

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This was published 11 years ago

Frequent flyers left out in the cold

By Amanda Bryan

Remember the good old days when business flyers could clock up free tickets to the holiday destination of their choice in return for lugging a laptop tablet across time zones a few times a year?

These days, you need a frequent-flyer strategy if you want to nab the same calibre of free seats because there's a new game in town and it's all about status – silver, gold and platinum-plated.

These days, you need a frequent-flyer strategy if you want to nab the same calibre of free seats.

These days, you need a frequent-flyer strategy if you want to nab the same calibre of free seats.Credit: Jessica Hromas

It's a major change of tack and it's been gathering pace ever since business flyers found themselves competing for seats with credit-card holders and other loyalty scheme participants.

Millions of extra points are now being awarded for terra firma transactions, which mean there are fewer free seats than ever to go around.

Gordon Noble, an engineer who's been an elite-status frequent flyer since the late '90s, said the ability of people to earn points through third parties had eroded the value of the system for "bums on seats" frequent flyers.

"You may have a once-a-year flyer whose business expenses run through their credit card who's beating frequent flyers to the mark," he said.

It's got many frequent flyers hot under the collar – but it's not about to change. These points have become a lucrative source of profit for the airlines who sell them to third party partners like Optus, Woolworths and Caltex for cold hard cash.

Macquarie Equities analyst Russell Shaw recently valued the Qantas Frequent Flyer program at more than $2 billion - more than half of the airline's market value.

As a result, status has become the new currency for business travellers. You can only earn status credits by flying, and the higher you rise through the ranks, the more points you get for flights - with added perks that ensure points are easier to redeem, and offer improved seat selection, access to swanky airport lounges, extra baggage allowances, and priority check-in and upgrades.

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Status also works to the advantage of the airlines. It helps them court the most lucrative customers - those who fly very frequently, and who pay to sit in business class or even first class on long-haul international flights, said David Flynn, editor of Australian Business Traveller.

Flynn said this was why we've seeing frequent flyer programs introduce new elite tiers – Virgin Australia recently introduced platinum, and Qantas now has a super-platinum level called platinum one as well as its invitation-only chairman's lounge.

"It's in this platinum stratosphere where the best bonuses are to be found and they'll continue to grow, at the expense of lower membership levels," he said.

The result? Frequent flyer programs have become highly aspirational. Members must go to greater and greater lengths to attain and retain their elite status, and some dedicate hours of their time to it.

There are lots of strategies to maximise status credit for those in the know, said Clifford Reichlin of australianfrequentflyer.com.au - an online forum on which frequent flyers can share hot tips.

"These flyers spend lots of time working out the most economical way to get status credits," he said.

But what about the average flyer? Do those frequent-flyer benefits still stack up?

The experts agreed that, for most economy travellers, Frequent Flyer programs may no longer be worth it. Dwindling program value and the rise of discount fares have changed the equation.

In a recent report, Choice magazine found that unless you're clocking up serious air miles or paying for more expensive seats when you do fly, you are actually better off finding the best flight deal and saving your money to spend elsewhere.

There is some good news for frequent flyers. Despite perceptions to the contrary, it's actually easier to redeem your points these days - but there is a catch. You can't be too fussy about when you want to go or what cabin class you want to fly in, Macquarie Transport analyst Russell Shaw said.

Qantas suggests booking up to 353 days in advance for its classic award seats but new redemption options such as "anyseat" rewards and points-plus-pay give you a better chance at securing seats.

Shaw said that, in theory, the redemption options over time should improve as airlines seek to increase their partnerships so there are more ways to earn and burn points.

Here's what the experts say:

Upgrading a purchased flight usually offers the best value in frequent-flyer point redemption, but getting those upgrades is not easy, said Noble.

Although higher status will trump lower status, there are some other things that will boost your chance of success of requesting upgrades such as buying the right fare type (go for a y-class - which is the highest economy fare) and choose flights likely to have a lightly loaded business cabin (i.e. fly at a time when you'll be going against the flow of traffic). For example, the business cabins on busy Asian routes to Shanghai, Singapore and Hong Kong are lightly loaded between December and mid-January while flights to and from these destinations in economy class are full of people travelling home for holidays.

❏ The true value of points is well disguised thanks to a complicated set of algorithms that the airlines use to determine how much status you earn from a flight, as well as how many points you burn through when using them. Some legs have a low dollar cost but earn you a lot of status credits. Online applications dedicated to help status-seekers calculate these opportunities have popped up. ExpertFlyer.com, for instance, lets you see the seat availability and loadings on different flights. You can also get a taste of the options by search under "mileage run" or "status run" on online forums such as australianfrequentflyer.com.au.

❏ Compare different frequent flyer programs according to your priorities. Virgin recently launched a new business class, and is building international partners and competing heavily against Qantas to attract a following to its Velocity frequent flyer programs. One of its strategies is to allow families to pool points and status credits and put their membership on hold for six months for parental leave without losing their credit status. Noble said Virgin had taken some huge leaps in the right direction to better cater to domestic business travellers and frequent flyers, but when it came down to who has better redemption capabilities and awards, Qantas still has the edge by being a member of the Oneworld global airline alliance.

❏ To boost your points, Shaw suggests you align your spending along one partner program. For instance fly Qantas, shop at Woollies and have a Qantas branded credit card (provided you spend enough on your credit card every year to justify the higher fee attached to a loyalty card compared to a standard credit card). Reichlin notes that some small businesses have found they can add significantly to their points tally by taking up the option to pay their tax by credit card.

If value for money is important to you, steer clear of non-flight awards such as toasters and vouchers. In its recent report, Choice noted a Virgin traveller would have to make the Sydney or Melbourne-LA return flight four times to earn enough points for a $129 microwave while a Qantas entry level bronze member would need to fly Sydney-LA return six times to receive a $439 TV set.

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