Fuel discounts vs frequent flyer points: which is better value?

By Chris C., May 1 2015
Fuel discounts vs frequent flyer points: which is better value?

Through the recent tie-up between Virgin Australia and BP, motorists may now be tempted to ditch the traditional ‘four cents per litre’ fuel saving vouchers in favour of earning Velocity Frequent Flyer points on their tank of petrol.

But are consumers getting the best value when paying the full sticker price at the pump with ‘free’ frequent flyer points on the side, or are they better off taking advantage of supermarket fuel discount vouchers provided by Coles and Woolworths with the purchase of groceries?

We take a look at the major options available to car owners including with BP and Virgin Australia Velocity, Woolworths/Caltex and Qantas Frequent Flyer and Coles Express (Shell) and Flybuys to find the best deal.

Option 1: Virgin Australia Velocity Frequent Flyer + BP

By filling up at participating BP service stations you’ll collect two Velocity Points per litre of petrol purchased (up to 150 litres per transaction), which comes out at 100 Velocity Points on your average car-sized fill-up of 50 litres.

Looking at a one-way Sydney-Melbourne flight with Virgin Australia, you’ll need 6,900 Velocity Points and $21.11 for an economy ticket or 13,800 Velocity Points and $21.11 to fly in business class.

The same seats can often be bought outright for $149 in economy and $699 in business class between Sydney and Melbourne, which means those two Velocity Points you’re earning per litre are fetching 3.706 cents of value (combined) when flying down the back, or 9.824 cents all-up in business class.

The verdict: If you only use points to book economy flights, stick to the 4c/litre discounts offered elsewhere – but if your points are destined for business class travel, you’re much better off taking two points per litre than a four cent discount.

As an added bonus, most in-store purchases at BP also attract two Velocity Points per dollar spent (up to $100 at a time) which could get you that free flight even faster.

Read more: Virgin Australia, BP let you earn points on petrol

Option 2: Qantas Frequent Flyer + Woolworths/Caltex

Members of Woolworths’ Everyday Rewards program can likewise earn two Qantas Frequent Flyer points per litre of petrol at participating Woolworths/Caltex outlets (up to 150 litres per transaction), yet only after spending at least $30 at a Woolworths supermarket or with Woolworths Online.

That’s how shoppers pick up a 4c/litre fuel discount voucher, which Everyday Rewards members can either redeem at face value or can instead opt to earn two frequent flyer points per litre in lieu of fuel savings.

Redeeming those points for a Sydney-Melbourne flight with Qantas, you’d be looking at 8,000 points and $30.13 for an economy seat that can often be nabbed for $159 outright, or 16,000 points and the same $30.13 for a business class ticket that normally sells for $749.

The verdict: Combined, your two points per litre attract 3.22 cents of value when booking economy and 8.985 cents when flying in business class on this particular route – so again, either save your points for a business class ticket or take the 4c/litre fuel saving.

Also read: Woolworths caps Qantas Frequent Flyer points on petrol

Option 3: Flybuys + Coles Express (Shell)

Coles Express (Shell) service stations award one Flybuys point per $2 spent on most purchases including fuel and snacks, but unlike Woolworths/Caltex you can still earn points when redeeming a 4c/litre fuel discount voucher – picked up from your last shop of at least $30 with Coles or Bi-Lo.

Flybuys members can swap 10,000 points for $50 of Webjet credit, but to book that same one-way flight from Sydney to Melbourne, you’d instantly lose $32.90 in unavoidable Webjet fees.

With Webjet offering no fee-free payment methods, add to that a further $7 fee when booking a Qantas flight or $7.70 to do the same with Virgin Australia, and your $50 Webjet credit has diminished to an ultimate discount of just $10.10 with Qantas or $9.40 with Virgin Australia, over what could be booked directly on the airlines’ own websites.

Instead, convert your Flybuys points into ‘Flybuys Dollars’ at the rate of 0.5 cents each, with a true $10 saving on groceries possible after earning 2,000 points.

Assuming a petrol price of 139.9 cents per litre, a 4c/litre discount on 50 litres of fuel is $2, with 33 Flybuys points on the side. That works out at 0.66 Flybuys points per litre – adding a return of 0.33 cents per litre – for an all-out benefit of 4.33 cents per litre.

The verdict: If fuel savings make the most sense for your circumstances, earning a handful of Flybuys points with every tank is still a better deal than taking fuel discounts alone, but doesn’t compare in value for travellers looking to fly at the pointy end.

Also read: What is a Qantas frequent flyer point worth?

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Chris C.

Chris is a a former contributor to Executive Traveller.

Qantas - Qantas Frequent Flyer

01 May 2015

Total posts 7

My tip for Qantas Frequent Flyer + Woolworths/Caltex Option is to pre-purchase Woolies Gift Cards (via NRMA or Entertainment Books) at a 5% discount. Opt for points so effectively 7c off at litre @ $1.40/L and still get the Qantas points.

Virgin Australia - Velocity Rewards Platinum

29 Aug 2014

Total posts 34

That's really brilliant.. so i can use the gift cards at the participating Wworths' Caltex stations?

Qantas - Qantas Frequent Flyer

06 Nov 2014

Total posts 356

But you need to take into account that to be eligible for fuel discount, you would have to spent >$30 already in WW/Coles/Bi-Lo, which retails grocery at a higher price than Aldi, and you will need to shop more frequent than you gas up, so that every time you shop you have the voucher or ability to earn QFF points with EDR.

We are Aldi shoppers and I find the savings we have far outweighs the 4 cents discount on fuel. So the ability to earn VFF points without the voucher is a real bonus.

Qantas - Qantas Frequent Flyer

26 Oct 2013

Total posts 33

If you have a package car, instead using BP card where you will not get points, pay with you point earnjng credit card / swipe Velocity card & then make a package claim for reimbursement- that was you will credit card points + Velocity points and ensure you get pre tax fuel purchase as well

Turkish Airlines - Miles & Smiles

08 Jun 2014

Total posts 265

I recently purchased BP Fuel to gain Velocity points twice. One purchased spent was $50.02 (35.50litres) and earnt 72 points. I did pay with my VISA Prepaid Debit card attached to my Velocity Silver card but have no idea how many points I earnt.. either it is half the points per doller or 1 point per dollar as I know overseas you earn 2 points per dollar.

Two days ago (even though I forgot my Coles Coupon to save the 4 cents) I purchased $66.68 (44.78litres) + ice cream with my Velocity Amex and earnt 70 points seen on my Amex bill at Coles Express. I could have saved somemore with the fuel voucher but didn't...

Too many numbers but at least i'm proving and showing it hear... so which is better? 

24 Apr 2012

Total posts 2437

We'll leave you to make your own calculations Matt, although BP rounds your fuel purchase to the nearest litre when calculating points – so 35.5 litres is counted as 36, thus 72 points.

You'd have then earned half a point per dollar with Velocity Global Wallet, although most BP stations accept American Express so you could have earned more points by using that card instead.

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