Qantas has been emailing its more than five million Frequent Flyers warning them they might not be able to earn or burn QF points on a whole range of credit and charge card products from the end of March:

If you have points in a participating credit or charge card reward program which you plan to transfer to your Qantas Frequent Flyer account, then there are some changes you need to be aware of.

After 31 March 2009 you may not be able to do so. There are two things you may need to do if your card is affected.

  1. Transfer your points to your Qantas Frequent Flyer account before 31 March 2009.
  2. Opt-in or switch to a direct earn option from your card provider if you want to keep earning Qantas Frequent Flyer points after this date. This option automatically adds the points earned from your everyday spending on your card to your Qantas Frequent Flyer account.

While this may not seem like the end of the world (or airline freebies) to some, there is a lot more to the impending deadline for making choices about how to manage Qantas points than meets the eye.

This aggravation — or opportunity, as the case may be — comes about because of a set of agendas in banking, retailing and airline loyalty programs.

In 2003, the Reserve Bank kicked off some of the changes by reforming credit card schemes. The costs to merchants and consumers for using credit and charge cards fell. But the capacity of card systems to pay airlines for the points they offered to convert into tickets rose, quite steeply.

They were no longer being paid for by charges passed on to all consumers, but only those who used cards instead of cash or EFTPOS.

And the airlines, everywhere, began to jack up the price of their points to third-party providers like department stores, health funds, car renters, and hotels anyhow.

Soon afterwards, some cards began to put caps on the loyalty points you could earn, while others added a charge for the optional participation in ‘reward schemes’ on top of the annual membership fees.

The old $1 spend for one airline mile or point ‘gold standard’ dropped to $2 for one point in many cases.

As air fares fell, the spend-$100,000-on-your-card-for-a-‘free’-flight-to-Fiji-or-Bali option began to look pretty suss, even to the dumbest consumers.

Phone companies started to cap the amount that could be paid on some cards and to ban others, particularly charge cards which demanded a higher merchant fee.

The good old days of plumbers, builders and other small to medium businesses racking up a few million points on their Telstra or supplier bills for a yearly trip to Tuscany for two flying first class were over.

By the end of last year, the difference between what airlines, all airlines, want for selling blocks of points to third parties, and what the plastic payment schemes were prepared to wear had become very wide.

When you see a three-points-for-$1 spend offer these days, the seller of those goods or services wants your business so badly they will pay the airline or card program top dollar for the points they will give you.

Qantas, like other carriers, had contemplated spinning off its loyalty scheme into a separate listed entity. Irrespective of whether or when it revives such a strategy, it intends to leverage the value of its brand through frequent flyer points to the max, as evidenced by its agreement last month with Woolworths to link Qantas points to its Everyday Rewards program, sealing a marketing and loyalty trifecta between the big airline, big groceries and big petrol.

The Qantas email offers solutions to the severing of its loyalty links with some cards.

In some cases, you can pay yet a further fee to a card issuer to have all your points swept into your Qantas Frequent Flyer tally. Or in some card systems, you could decide to accumulate all points in a manner which leaves you with a choice of burning them on Singapore Airlines, if not Qantas, or on a non-airline reward.

There are a multitude of options and sub-options which would make a white board look like a game of snakes-and-ladders.

But you have to choose by 31 March.

Peter Fray

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