The Qantas Airways Limited (ASX: QAN) share price is down more than 2.5% after making changes to its frequent flyer program.
Qantas is Australia’s leading airline. It was founded in the Queensland outback in 1920, the Qantas name was originally Queensland and Northern Territory Aerial Services. The company operates two main airlines – Qantas and Jetstar – and subsidiary businesses including other airlines, businesses in specialist markets such as Q Catering, Qantas Freight Enterprises and the popular Qantas Frequent Flyer program. It employs some 30,000 people with around 93 per cent of them based within Australia.
Qantas Frequent Flyer Changes
According to media reports, Qantas has increased the cost of upgrading seats.
The airline has increased the number of points needed to redeem a business or first class seat, including the number of points needed to get an upgrade.
The frequent flyer changes are going to cost the airline $25 million because it’s going to reduce carrier charge fees by up to 50% for international reward flights, which could save frequent flyers around $200 on each return flight using points.
Qantas will also release 1 million additional reward seats on Qantas and partner flights, and Platinum card holders can qualify for Lifetime Platinum rewards.
The flying kangaroo will also reduce the number of points needed for international economy classic reward seats by 10%.
Qantas CEO Alan Joyce said: “This is one of the most popular areas for people to redeem points,” Qantas Group chief executive Alan Joyce told a press conference at Sydney Cricket Ground on Thursday morning. But this is the first time in 15 years that we’ve done that.”
Is Qantas A Buy?
This seems like an interesting move, but I’m not sure what effect it will have on Qantas’ bottom line.
Over the past five years Qantas has been a solid performer with pleasing shareholder returns and growing profit.
There are two things that could decide if Qantas is a good buy today: What the oil price does and demand for airlines. I don’t know what either of those areas are going to do in the coming years, which is why I’d rather stick to investing in something more reliable, such as the ASX shares in the free report below.
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