Qantas Keeps Frequent Flyer Program Despite Losses
2nd Sep 2014
The ailing state carrier is not about to readily give up the Frequent Flyer program that has provided a lifeline for quite some time now.
When Qantas announced last week a net loss of $2.8 billion during the last fiscal year, not everyone knows that its loyalty program has been the envy of most airlines as it has always been profitable.
When the flag carrier plunged into financial crisis in 2011 with huge losses and increasing indebtedness, it has never been able to claw its way back to financial health since then. Some investors even suggested to Qantas to sell the Frequent Flyer business, which was estimated to fetch as much as $3 billion, to service its debt while, at the same time, avoiding it from possible collapse.
According to Monash University marketing professor, Steve Worthington, the airline could never possibly loosen its tight grasp on its loyalty program as it has become its 'cash cow', allowing Qantas to remain in operations despite its losses.
The program has over 10 million members worldwide?said to be almost half the entire Aussie population. Analysts said that Qantas Frequent Flyer is more than just an average loyalty program. The frequent flyer program that normally gives rewards and points for travel, it has gone beyond its traditional scope of business.
It also offers data mining, consulting services and, believe it or not, it even operates gift card programmes for major retailers in Australia, making its loyalty points the de facto currency in the country second only to the national currency.
During last week's gloomy report by Qantas, its Frequent Flyer program is the only unit of the Qantas group was able to post profit and earn for the company a somewhat ray of hope for its survival in the coming years.
Qantas CEO, Alan Joyce, said that the airline is not planning to sell any portion of the program for now. He added that Frequent Flyer is the business where shareholder value is at a premium allowing them to keep the unit to themselves.