Qantas has revised its frequent flyer inducements as part of changes to the Woolworths Reward program in which it participates.
Such changes to airline and grocery loyalty programs are difficult to write about without giving a free ride to the interested parties, but the idea that consumers might buy something from someone to the exclusion of a competitor for the promise that someone else might possibly give them a ‘free’ flight before they die trying to get it is an interesting social and business phenomenon.
So let’s start with a few recitals. The Qantas frequent flyer program is very, very good, and this writer and his family are among the millions of members who have done very well from it, and quite possibly in its earlier years, done much better than the airline might have ever wished.
However frequent flyer programs have changed radically in the last decade. They are data based direct marketing schemes, and they sell to you rather than reward you. The reward flights you might covet may well be on sale, by the same airline or an affiliate, or a competitor, for less money anyhow, and for a firm booking, even one with cancellation penalties, rather than an opportunity to get an upgrade, or indeed a not so free seat.
The fundamental question for some if not many households is whether or not loyalty to shopping at Woolworths to the exclusion of possibly lower priced alternatives at other grocery chains, or for cheaper petrol at ‘independent’ outlets than those linked to a supermarket brand is really worth it?
If the three households closest to the writer’s heart were to forgo Aldi, Coles or other opportunities to buy groceries for less than Woolworths may charge for them, we’d be as much as $70-100 per week worse off in aggregate. That’s up to $5000 a year worse off, not counting missing out on cheaper petrol since we all have alternatives to the grocery linked petrol sellers. And while an airline loyalty scheme may just deliver a similar value in rewards, it will not be a ‘free’ reward, but one that might cost a lot in fees, levies and lost competitive opportunity.
So, the news from Qantas and Woolworths is interesting, but problematical. The changes didn’t go down well at Australian Business Traveller either, which says Qantas Flyers will be worse off compared to their previous terms of engagement with the Woolworths Rewards scheme.