Airline reports continued revenue and EBITDA losses but sees loyalty division earnings, contribution and membership grow
Expanding loyalty program partnerships, introducing a new environmental-oriented flying tier and providing more easily accessible seats and redeemable rewards have helped Qantas’ loyalty program retain earnings and member growth in the face the ongoing pandemic.
The continued buoyancy of the frequent flyer offering was a highlight in Qantas’ half-yearly financial report, announced this week. Overall, Qantas reported an underlying EBITDA loss of $245 million and underlying EBIT loss of over $1 billion for the first half of FY22 as ongoing uncertainty due to Covid continued to impact the airline. To date, Qantas said revenue losses since the start of the pandemic have grown to more than $22 billion.
Qantas also noted total flying during the half was cut down to 18 per cent as international travel and state restrictions continued. The month delay to opening Western Australia’s border alone cost the airline $60 million.
Against this, the Qantas frequent flyer program was a bright spark. While revenue remains a far cry from that reported pre-Covid, growth was demonstrated year-on-year, with revenue reaching $485 million in H1 FY22. Underlying EBIT was also up by $2m to $127m. In addition, the loyalty offering’s cash contribution rose to greater than $500m of gross receipts in the first half, while membership grew 150,000 to 13.8 million.
What’s more, a combination of border openings and increase in seats available to Frequent Flyer members by up to 50 per cent saw record levels of redemption, the company said.
Program advancements over the first half included expanding the loyalty partner program to drive earnings, including new deals with Optus, Accor and bp. The group also re-signed five major financial services partners along with key supermarket partner, Woolworths.
A new element meanwhile is the Green Frequent Flyer tier aimed at rewarding members for making more eco-friendly decisions both on the ground as well as in the air. Rolling out from 2022, the Green tier sits alongside existing flying tiers and is designed to educate, encourage and reward the airline’s 13 million frequent flyers for everything from offsetting flights to staying in eco-hotels, walking to work and installing solar panels.
To achieve Green status, members need to complete at least five sustainable activities across six areas – flying, travel, lifestyle, sustainable purchases, reducing impact and giving back – each year. Rewards for doing so include bonus Qantas Points and status credits.
Qantas said the initiative had been driven by feedback from frequent flyers, with research showing almost two-thirds of customers want to be more aware of their impact on the environment and would like support in their efforts to be more sustainable. An array of business-wide sustainability initiatives and investments were also flagged in the financial presentation.
On the loyalty agenda by the end of 2022 is the launch of Qantas Business Money, enabling small to medium enterprises to transact in foreign currencies at competitive rates and earn points in the process thanks to a partnership with Airwallex.
Speaking on the results this week, Qantas CEO, Allan Joyce, noted the strength of Qantas Loyalty in what has been a difficult couple of years for the airline.
“We’ve expanded our program partners, which has helped drive earnings. We’ve reinvested in more reward seats on flights and reduced the points for a holiday or hotel by at least 30 per cent. That’s kept our members highly engaged, which is the bedrock for the program’s continued success,” he stated.
More broadly, flexibility has been critical to keeping Qantas customers engaged and booking. Other initiatives pursued in the name of customer convenience include continued investment in technology to increase contactless and self-service options at airports; a Covid help hub to guide customers through their journey from destination-specific information to reminders and tailored messages in the lead-up to their flight; unlimited date changes on domestic and international fares to end of April 2022 and extension of credit vouchers until 31 December 2023.
Another strong performer for Qantas was a vaccination recognition program rewarding more than 700,000 customers with points, status credits and vouchers for being fully vaccinated against Covid.
“Understandably, people were gun shy about booking flights with all the uncertainty. Relaxing fare conditions gave customers the confidence that if circumstances change, it’s much easier to change your flight,” Joyce added. “By doing that, we removed one of the biggest blockers to forward bookings.”
The result was record Net Promoter Scores across Qantas and Jetstar domestic services as well as the loyalty group, as well as recognition as most trusted airline in the region according to NPS surveys conducted between July and December 2021.
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