Whether they like it or not, Qantas and Virgin Australia may have a growing crisis of trust to deal with among their customers.
The pressure points are their so called loyalty schemes, a quaint term to apply to data base one-on-one marketing schemes, and opaque pricing practices.
The lure of ‘free’ is being replaced by the anger of being conned.
But where does the truth lie, and are the airlines completely to blame for this, or are they just going with the flow of a consumer society where simple minded concepts of value, honesty, and ‘rewards’ have been diluted and corrupted?
These are big issues everywhere, not just in Australia, but the two pressure points this week have been ‘drip pricing’ and further Reserve Bank of Australia credit card reforms that would add to the decline in the value the relationship between Visa, Mastercard and American Express and various airline loyalty schemes.
They follow the ejection of Qantas from the Woolworth’s Everyday Rewards scheme as it had been currently know, and a rising number of slow learners discovering that the arithmetic of loyalty scheme redemptions just doesn’t add up to sensible buying behavior.
An outbreak of numeracy in consumers would wipe out loyalty schemes for airlines completely. It is always cheaper just to go and buy a ticket than spend $100,000 on card purchases in order to qualify for spending hundreds if not thousands of dollars on extra charges attached to a ‘free’ seat that the airline mightn’t have available anytime before you die anyhow.
The ‘silly’ Morning Herald today has one of those mortifyingly stupid pieces about how you can keep earning Qantas points without flying (or buying overpriced groceries or petrol).
It includes a gym where after 180 years of paying membership fees and hard training you will be eligible for a single return economy class ticket to London.
No amount of fairy floss journalism can arrest the rising tide of consumer skepticism. Or in the case of Woolworths, its realization that paying Qantas something like $80 million a year for the points value of enrolled grocery purchases was an added drain to its balance sheet for sod all value.
Qantas and Virgin Australia and their low cost brands Jetstar and Tigerair have very good products to offer consumers at various levels of value. Sharp marketing and online sales practices can however damage brand loyalty, and when the airlines have to fight the Reserve Bank, the bank credit card providers, and the ACCC over integrity pricing issues, the need to repair consumer relations is both obvious and challenging.