Qantas overhauls seats and pricing to fit consumer issues

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Qantas overhauls seats and pricing to fit flux demand and consumer issues

Qantas unveils Frequent Flyer program changes

A million extra seats and a slashing of carrier charges are the centrepiece changes in the overhaul of Qantas’ Frequent Flyer program, announced on Thursday.

“It’s all about more seats, fewer fees and better value,” Qantas chief executive Alan Joyce said at a media conference at the Sydney Cricket Ground.

“We’re so far ahead of our competitors at the moment, we don’t want to drop the ball and we don’t want to be complacent”: Qantas chief executive Alan Joyce.CREDIT:BLOOMBERG

In response to complaints from consumers about the scarcity of seats on popular routes, the company pledged a million extra reward-based seats per year on its aircraft and those of partner airlines, with booking fees associated with points-based purchases cut by up to 50 per cent on international flights.

For example, an economy flight from Sydney to New York will now have carrier charges of $180, instead of $360.

The additional seats will concentrate on peak periods, such as Easter, Christmas and school holidays.

“We know the majority of our members want to use their points to take a dream trip overseas, so we are adding more reward seats … to places like London, Los Angeles, Tokyo and Singapore,” Mr Joyce said.

It’s the “single biggest overhaul of the Qantas frequent flyer program in its 32-year-history,” he said.

The investments are expected to cost Qantas $25 million per year.

The number of points required for booking international economy flights through Qantas will be slightly reduced, while the amount for more expensive flights and class upgrades will increase – which Mr Joyce defended as the first rise in 15 years, and a reflection of improvements to service in that period. Upgrades will require an increase in points of between 9 and 12 per cent.

Some of the changes coming to the Qantas Frequent Flyer program

  • One million additional reward seats added to Qantas and its airline partners
  • Carrier charges on some international bookings to be slashed by up to 50 per cent
  • Up to 15 per cent increase on points for premium cabins on domestic and international classic flight reward seats
  • A new two-tiered points club
  • New airline partners include the likes of Air New Zealand, China Airlines and Air France
  • A new lifetime membership will be available to flyers who earn 75,000 status credits

“We still think this is good value for money,” he said.

Australian Business Traveller editor David Flynn said the changes were good news for members who had a lot of frequently flyer points and wanted to use them to book economy class seats.

“However, if you prefer to fly in the comfort of premium economy, business class or even first class you’ll need to pay up to 15 per cent more points,” Flynn said.

“That, and the increased points requirement for upgrades, will rub some frequent flyers up the wrong way”.

Points Whisperer Steve Hui said his first reaction to the changes was relief, because he was expecting first and business class point requirements to increase more than they did.

He said the new system was more about placating grievances than breaking new ground.

“I think Qantas has heard the complaints that their fees are too high. These changes, in my view, are more about fixing the complaints rather than enhancing the benefits,” he said.

“It’s essentially a patch-up of all the complaints. Which is not bad, that’s what a good business does. But there’s not much in terms of new benefits.”

Mr Hui said that the decrease of carrier charges were “great”, but pointed out that Singapore Airlines completely removed them.

“It’s so cheap to fly to Europe with Singapore now,” he said.

The changes in the points cost served as a timely reminder of one of Mr Hui’s central recommendations.

“The key thing is not for people to save their points like a retirement fund. Once they have them, they should use them.”

Mr Joyce rejected the suggestion that the lowering of point requirements in economy flights while increasing premium services would increase a class divide.

“I don’t think so. You’ve also got the benefit of the carrier charges coming down, so that helps people who maybe can’t afford the cash component,” he said.

He said that 300,000 of the new seats will be in premium classes, encouraging lower-tier point earners to take their time and save.

The decrease in economy points required and carrier charges will come into effect today, with other changes rolled out later in the year.

Qantas has retained 80 per cent of its consumers in the corporate market despite intense competition, Mr Joyce said.

The airline also announced the establishment of a new points club, a two-tiered system with a minimum annual points-spending threshold.

The base tier will require members to earn 150,000 points on the ground, with a lower cap for points earned by flying.

A new lifetime membership will be available to flyers who earn 75,000 status credits, called Lifetime Platinum, which will launch in September. The threshold will be more than five times the amount of credits required for Lifetime Gold.

“In some ways, it’s more exclusive than the Chairman’s Lounge,” said Qantas Loyalty chief executive Olivia Wirth.

Mr Hui said only a “tiny” number of people would reach this new status.

“It’s aimed at less than the 1 per cent,” he said.

Mr Joyce said the move was to guard against complacency.

“Once they’ve got to Lifetime Gold they were saying ‘what’s the incentive of continuing?’ and now we’re giving them that incentive,” Mr Joyce said.

“We’re so far ahead of our competitors at the moment, we don’t want to drop the ball and we don’t want to be complacent. And this is all about not being complacent.”

In terms of safety concerns, Mr Joyce said the company was always monitoring flight paths over areas of conflict, with a surveillance team that works with the government, intelligence forces and the AFP.

“We know where to fly to and where not to fly to,” he said, while declining to speak specifically on which areas they had been instructed not to fly to.

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