Qantas to spin off frequent flyers
Various media including The Australian have reported this morning that Qantas’ five million frequent flyer members will be taken out of the airline and put into a separate company that will be listed on the stock exchange for at least $3 billion.
As reported in The Mole last week and denied by Qantas as late Saturday, the new venture is expected to include a Canadian loyalty program operator, Aeroplan, as a strategic partner, but it will be controlled by Qantas.
The new Qantas entity is expected to be launched within the next nine months and will have a much wider customer loyalty program for frequent flyer customers, including the flexibility to purchase seats on any flight.
It is expected to do this by changing the number of points required to redeem a flight in a way similar to airline pricing. The number of points will be influenced by factors such as origin, destination, season and day and time of travel.
However, Qantas frequent flyer members will be hoping that once the new entity is up and running it does not emulate Aeroplan’s recent decision to introduce an expiry policy on frequent flyer points.
Aeroplan was spun out of Air Canada and listed in 2005 and less than two years later it introduced a new policy that members can lose points if they do not redeem them within seven years.
It also decided to date-stamp its Aeroplan Miles, which can be redeemed for items such as gifts and flight tickets on Air Canada.
Members now have to use the program at least once every 12 months, either by redeeming points or accumulating them, or all miles in the account expire and have to be bought back.
Aeroplan is now much broader than Air Canada and has an innovative series of flexible prepaid reward cards that can be used towards purchases made in dining, spa, sports, entertainment, getaways, homewares and fashion.
The new Qantas entity will also contain a Jetstar loyalty component and will expand to include more affiliated partners such as financial institutions.
Most people don’t realise that Qantas makes a profit of $175million a year from its frequent flyer business and if it was listed on the Australian Securities Exchange it could get a valuation of more than $3billion.
The Qantas management team has been working on a separate frequent flyer entity for more than a year, with more than a quarter of Australians, or one in four, Qantas frequent flyer members, which is a huge spread, giving them a big opportunity to further leverage into financial services, telecommunications and petrol offerings.
Report by The Mole
John Alwyn-Jones
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