Frequent flyer programs provide big revenue potential


There is much to learn from the world’s most effective revenue generating loyalty program. The Qantas Frequent Flier Program produces more revenue per member, and per passenger flown, than any other. For fiscal year 2013, the Qantas Loyalty business segment of the Qantas Group posted revenue of AUD 1.205 billion ($1.09 billion).

 The Jetstar MasterCard allows travelers to accrue Qantas Frequent Flyer points or Jetstar dollars.

 With 48.3 million passengers, that’s more than $22 per passenger. By comparison, Delta expects its SkyMiles program to post revenue of $1.3 billion for 2014 or $7.90 per passenger based upon 2013 traffic of 164.7 million passengers.

The reward of revenue from frequent flier programs is largely tied to co-branded cards. Airlines serving significant populations of credit-worthy customers use cards to tap a stream of retail revenue activity. This allows airlines to create daily transactions with members beyond the 2 or 3 trips a consumer might take each year. Frequent flier programs can also encourage consumers to buy a la carte services. It’s a pity most airlines fall short here, as few provide bonus miles or points for the purchase of early boarding, assigned seating, or buy-on-board food. Pegasus Airlines has a very robust frequent flier offer in this regard. Members of its Pegasus Plus program accrue points for any purchase made with the airline such as seat assignment, excess baggage, and pre-ordered meals. Virgin Atlantic sweetens the offer for its VIP airport service, which is called Guest List, with a bonus of 5,000 Flying Club miles per booking.

Qantas Data Book 2013 (for the year ended 30 June 2013) at the website.

Delta Investor Day 2013 (11 December 2013) at the website.

How Qantas Frequent Flier Boosts Ancillary Revenue
Qantas Frequent Flyer was made a separate business segment in 2007 to create a stand-alone business premise and encourage an entrepreneurial environment.

Efforts to boost membership have paid off; the program added 3.6 million members in 4 years. That’s growth in excess of 60 percent.

When banks compete, consumers win. Bank relationships are not exclusive with 18 banks offering cards (and unique offers) to members in Australia.

The program boasts more than 400 partners covering a wide swath of retail activity.

Partnership with Woolworths, Australia’s largest grocer with 873 stores, allows accrual to be an everyday event.

Qantas statistics from the Qantas Data Book 2013 at the website.Woolworths statistic from “Who We Are” page at the website reviewed March 2014. 

Categories: Uncategorized