QANTAS: Classic Plus Rewards. Rumoured changes to the Qantas frequent flyer scheme

Changes to the Qantas Frequent Flyer Scheme are only months away, according to an article in the AFR. Classic Plus is likely the name of the new scheme that will see points valued at 1¢ per dollar for use in redeeming airfares. New CEO Vanessa Hudson flagged changes to the scheme at the interim results announcement in February 2024. She promised that changes would help assuage the disquiet amongst Frequent Flyer scheme members about the scarcity of classic reward seats particularly.

This innovation comes as part of the changes to the frequent flyer scheme to meet the demand for more opportunities for members to use their collected points for airfares. The biggest shake-up of its loyalty program in years, it may allow customers to book a greater number of flights using fewer Frequent Flyer points.

According to the paper, unauthorised sources confirm that the conversion rate of 1¢ per dollar will be for economy fares, and there will be a more generous ‘exchange rate’ for premium classes.

At the base rate, an AU$100 fare would require 10,000 points. The Classic Plus redemptions are further predicted to be priced at sale fare rates. It is unclear as yet whether this will only apply when there are sale fares for cash available.

Current redemptions – Classic, Points Plus Pay and upgrades

There are five ways to redeem your points for Qantas and their partners’ airfares.

The first and best value is to redeem using Classic Rewards, which requires a set number of points according to route and class of travel. The problem with these is that they are hard to find, especially in Business, Premium Economy and First Class cabins. Classic Rewards are shown first to Chairman’s Lounge members, then Platinum Ones, then Platinums and then on to lower-status frequent flyers.

The second way is to use points, but not as Classic Rewards. Here, points are a substitute for cash and are valued at around .7¢ per dollar. That is less value than is being touted for the new Classic Plus redemptions value of 1¢ per dollar.

The third way is an extension of this non-Classic Rewards form of redemption. It is called Points plus Pay, where you can use a portion of points plus some cash to pay for the fare. Again, this is not as good value as Classic Rewards.

Upgrades

Next, there are two types of Upgrades you can request. One is just using points to upgrade from, say, Economy to Business Class. The number of points is set according to what class you upgrade from and to but it is not guaranteed. Your request for an upgrade is placed in a queue. Rewards are awarded based on your Frequent Flyer status, where in the queue you are, and the date of request.

Chairman’s Club members have the first priority on Classic Rewards and upgrades. Next is Platinum One, Platinum, Gold, and then Silver. Although once possible, it is now very rare that anyone without Gold or above status will be successful with a points upgrade.

Finally, you can bid for an upgrade using points and cash. Essentially you are making a bet against any other bidders that you will offer either more cash and/or more points. This is not a great use of points, and these upgrades are processed last, so your chances of success on popular routes is very low.

The biggest scheme

Qantas has the largest loyalty scheme in the country, with 15.2 million members last year, an increase of over a million from 2022. But members are unhappy, having held their points through COVID, and now feel they have nowhere to redeem them for airfares.

The issue is the available Classic Rewards have not kept up with the increase in members. According to Jefferies Equities, the number of Qantas Frequent Flyer members has increased by 76.7 % since 2012. But the number of Classic Reward Seats available has only risen by ~20% from 4 million to some 5 million. That explains the dissatisfaction. Qantas is not considering increasing the Classic Rewards seats available as part of the changes.

2PAXfly Takeout

Qantas is a very canny operator in the frequent flyer area. You don’t get to build the largest scheme in the country without some serious smarts. The issue is that Qantas always focuses on the success of any innovation for itself,not for its customers. In this instance, it needs to find a way of rewarding its customers by delivering on their demonstrated loyalty.

The most straightforward thing would be to release more premium reward seats at popular times. They could do that 353 days out as they do now for their premium flyers, or they could release them at other times to delight their faithful flyers.

Qantas needs to find a way of doing that, so it won’t cost too much to their bottom line. According to the AFR article, they are already having a hard time convincing investors that their profit projections are feasible. And then, there are all the other challenges they are facing. That includes supply chain issues, a shortage of aircraft, delays in deliveries, and a huge capital bill for new aircraft that will need to be serviced.

Bring on the announcement.