What will an enhanced Airpoints do? Clues from Qantas Loyalty.

Both Qantas and Air New Zealand reported their annual results last week and to a greater (Qantas) or lesser (Air New Zealand) extent gave details on their loyalty program's performance.

Airline frequent flyer programs are profitable revenue drivers for the airlines that have them. Frequent flyer programs are unique in that they are"very profitable but also very stable. If anything, the recent developments are proof points to the enormous value of the programs".

We asked; how might the wider and more detailed insights from the Qantas program indicate what's next for Air New Zealand Airpoints who report the program will be enhanced?

Qantas Loyalty

Qantas Loyalty was the only Qantas division to make a profit in the last year (results from investor presentation on 26 August 2021). Key stats:

  • Members: 13.6 million (or 53% of the Australian population)

  • % of Australian credit card spend on a Qantas credit card: 35%

  • Revenue of Qantas Loyalty: Au $984 million

  • EBIT of Qantas Loyalty: Au $272 million

There were several drivers of this performance including increased spend on credit cards earning Qantas points and 500,000 members spending at the new Qantas earn partner bp.

Air New Zealand Airpoints

Air New Zealand don't report on their Airpoints program's financial performance (it's a separate business unit and gets reported separately at Qantas). Key stats for Airpoints in the last year:

  • Members of the Airpoints program: 3.6 million (or 70% of the New Zealand population)

  • % of New Zealand credit card spend on an Airpoints card: 25%

Airpoints will be enhanced

Air New Zealand have recently delivered some updates including"adding more store partners, improving access to upgrades and increasing the ability to share benefits among family and friends.”

To come in the next 12 to 18 months are "enhancing our Airpoints loyalty program to further strengthen customer loyalty by expanding our partner ecosystem to introduce new improved benefits such as improved upgrades, greater personalised service and greater ability to share benefits among family and friends. The team is also looking at how we identify and leverage ancillary revenue opportunities".

Clues from Qantas Loyalty - what enhancements might be coming from Airpoints?

Comparing what Qantas Loyalty have already done might yield insights into what Airpoints might do with the enhancements coming in the next 12 to 18 months.

A new platform for loyalty provides a foundation for new developments. It'll also improve the current experience as today "one in five calls to the call centre are people ringing up to understand what’s happening with Airpoints".

Qantas Loyalty program features:

  • Insurance: Qantas offer a range of white-labelled products including health, car, home, travel and life insurance (issued by nib, Auto & General and TAL). The health insurance is complemented by Qantas Wellbeing App for additional points earn.

  • Payments: Qantas cards account for 35% of credit card spend in Australia while Airpoints card are assumed to account for 25% of New Zealand credit card spend; a 10% gap. Qantas started with Travel Money cards and expanded to a portfolio of 3 credit cards issued by Citibank (now sold to NAB). These cards have richer earning than the co-brands cards issued by banks. The Qantas Companion app provides insights and convenience. These also include automatic card-linked offers with partners.

  • Qantas Business Rewards: Expands the base of merchant partners who are buying points and includes SME businesses whose directors and employees are the beneficiaries of the points. Airpoints have an Airpoints for business offering but indications are that the Qantas offering is much broader.

  • Points Club: This is the most recent addition to the Qantas Loyalty portfolio. It's aimed at members who are high points earners but do not typically earn Frequent Flyer Status. The benefits include upgrades, vouchers, point earn multipliers and complimentary memberships.

  • Clubs - wine, golf: Qantas has made multiple forays into specialist membership clubs including Qantas Golf and EpiQure which have been discontinued. The Wine Club is the only remaining club which offers a quarterly wine subscription. Points can be earned and redeemed on purchases.

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