Qantas overhauls frequent flyer program, making economy cheaper

Qantas frequent flyer point users will spend less getting economy seats but more getting business and first class upgrades under changes announced on Thursday.

In what the airline described as the “single biggest overhaul” to the frequent flyer point system since it was established, the national airline has rebalanced the scales in favour of the cheap seats.

International economy seats will cost up to 10% less in points, effective immediately. But more points will be needed soon to get business class seats “to better reflect the value of this premium experience”.

Premium bookings will cost 15% more, and upgrades will cost 9% more. These changes will come into effect on 18 September.

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Qantas’s chief executive, Alan Joyce, defended the increase: “It is the first increase in 15 years and the product has improved a lot in that time. We still think this is good value for money.”

The complaints from members under the old system were not about point requirements being too high, but about the extra cash fee of the carrier charge, and the lack of availability of seats for busy dates and routes.

Joyce said this was what the changes targeted.

Qantas is also cutting the cash payment you have to pay when booking a flight using points – known as the carrier charges – by up to 50%. This would save an average $200 in cash for an international flight, modelling shows.

For example, an economy flight from Melbourne to Los Angeles previously would have required 90,000 points and $513. Now it will cost 83,800 points and $393.

But premium economy on the same flight will cost 18,600 points extra. That flight used to cost 144,000 points and $793. From September it will cost 162,600 points and $603.

Business class from Melbourne to LA used to cost 192,000 points and $943. Under the changes it will cost 216,800 points and $703.

The chief executive of the loyalty program, Olivia Worth, said the 18,600 increase was still in reach of average “bronze and silver flyers”.

“Many of our members are in the high hundreds of thousands, so these flights are very attainable for them,” she said.

Qantas’s frequent-flyer program has 12.7 million members and it processes four redemption flights and one upgrade a minute. Thirty-six per cent of all credit card expenditure is on a Qantas-branded or affiliated card. Joyce said the changes would cost the airline $25m a year.

There will be also more options to book economy seats using points, with more seats available and across more routes, by partnering with new airlines.

“More seats, fewer fees and better value,” Joyce said.

The airline will also launch a new system, Points Club, that gives membership based solely on points earned “on the ground” through purchases.

This would be for people who earn points when “they shop at Woolworths or go see a movie at Hoyts” rather than flying, Olivia Wirth said.

Currently 70% of frequent flyer points are earned through purchases and bookings, Joyce said, rather than flying.

The airline will also introduce “lifetime platinum”, reached when a person accrues 75,000 status credits.

Wirth said this would take roughly two decades of flying at platinum one, but it was “aspirational” and a “high bar”.