Executive Traveller exclusive
Qantas plans to make every seat on some of its Airbus A380 superjumbos purchasable with frequent flyer points to help customers burn through a mountain of loyalty points built up during the pandemic.
Airlines rarely reserve entire planes in this way, let alone the world’s biggest passenger jet.
The move reflects strong pent-up demand – loyalty members have accumulated air miles from everyday credit-card spending while stuck on the ground for months on end, and they want to use them to fly.
“We’ve had record day after record day of classic reward-seat redemptions,” Olivia Wirth, head of the carrier’s loyalty division, said in an interview last Friday.
“International flights are the ones our customers want.”
Australia began reopening its international border at the start of November, triggering a deluge of ticket purchases. In four weeks, Qantas frequent fliers burned through more than seven billion points on bookings, according to Wirth.
A return flight from Sydney to Los Angeles costs 83,800 points in economy class and 216,800 points in business, the airline’s website shows.
Qantas had consigned its 12-strong fleet of A380s to the desert for three years at the start of the crisis, only to retrieve half of them early, with carrier due to dust off six of the double-decker jets next year for long-haul services to Los Angeles and London.
How superjumbos become points planes
Some will operate as “Points Planes,” where every seat in every cabin can be booked using air miles, Wirth said in an interview at Qantas’ headquarters near Sydney Airport. The A380s can hold almost 500 passengers.
The Australian carrier is attempting to reinvigorate the travel market to recoup some of the $20 billion in revenue it has lost to the pandemic.
Airlines normally set aside only a certain number of seats in the cabin for points redemptions. The proportion varies according to the route, the size of the plane, and demand for tickets.
Qantas ran a three-day blitz of all-points flights when services between Australia and New Zealand briefly resumed in April.
There’s no hit to profit because airlines sell points to banks, supermarkets and credit-card companies for more than it costs to redeem them.
Airline loyalty divisions emerged as star performers in an industry hammered by travel restrictions, proving to be a rare source of profit as carriers continued to sell air miles even when fleets were grounded.
In the US, Delta Air Lines and United Airlines laid down their loyalty programs as security against billions of dollars of loans and bonds. Qantas’s loyalty business has more than 13 million members and is forecast to approximately double annual earnings to as much as $600 million by June 2024.
It’s still possible to mess up the loyalty side, said Evert de Boer, Singapore-based managing partner at On Point Loyalty, a consultancy specializing in the area.
Carriers must ensure there are enough available reward seats to keep members collecting points and, above all, air miles must be desirable and useful in order for the business model to succeed, he said.
“It’s all about making sure there remains utility in the currency,” de Boer said.
Qantas said in October it would set aside 50% more reward seats on international and popular routes within Australia until the end of 2022. That’s aimed at keeping happy the legions of frustrated fliers who accumulated points on the ground during Covid restrictions.
Wirth says her team is always looking for “pain points” in everyday life, where individuals regularly spend money but aren’t rewarded with air miles. That drove Qantas’s recent offer for earning points on certain plans with mobile-phone company Optus.
The scope of the model “is limitless,” Wirth said.
This article is published under license from Bloomberg Media: the original article can be viewed here