Put not your faith in Frequent Flyer Programs

I got a few push notices just now indicating that Virgin Australia is going into voluntary administration, the latest victim of the coronavirus crisis.

This does mean that a large number of people are likely to lose their jobs, which is a sad outcome. It also leaves Qantas without a competitor, which might not augur well for airfares going forward (and downstream, the domestic tourism industry).

It got me to thinking about how impermanent airlines are, even though they seem such rock solid businesses.

Do you remember vinyl airline bags? Back in the mid 1970s, they were all the rage. Your parents would buy you one (in my case, from the Coles Variety Store in Footscray) so that you could carry your lunch to school. My first one was a dark green Singapore Airlines bag, and then, two years later, a blue Ansett bag.

Any kid could recognise an airline from the tail fin logo. Qantas, for example, back then still had wings on the kangaroo.

And you knew that Pan Am was the American flag carrier airline – well, TWA did not fly to Australia, and who ever heard then of Continental or Delta or United?

All those airlines seemed immutable then. But how many of them are still around now? I know that Pan Am is long gone, the fallen giant of the airline industry, as with its rival TWA. I think Continental doesn’t exist either, but I am not too sure.

Of course, I am certain that Ansett no longer exists. It collapsed in a heap in August 2001, taking 58,000 of my frequent flyer points with it.

I am not presenting myself as some sort of Jetsetter. I wish I was. But my hard wired peasant origins mean that I still see travel as somewhat of an extravagance, which may result in me being one of the more wealthy corpses in the cemetery.

I earned most of my 58,000 frequent flyer point the typical way, with a credit card. In my case, it was a co-branded Ansett Diners Club card, which I got in early 1996. You don’t really see Diners Club anymore, and I cancelled mine soon after the Ansett collapse with minimal regret. I assume I got some bonus points somewhere along the way, because I did redeem three flights between 1997 and 1999, and I would expect that my credit card spend in the 1990s would have been somewhat lower than it is now when I earn close to three times as much.

I learned a somewhat valuable lesson out of the Ansett collapse, and that was that collecting frequent flyer points for the future was not a smart move. A more valuable lesson might have been to try and be a little more frugal in my spending, rather than treating my credit cards as ‘magic money’ (as a girlfriend a couple of years later described them).

In the eighteen and a half years since my Ansett points (enough for a business class trip around Australia) disappeared, I have not bothered to accumulate frequent flyer points. I cash out (mostly as cash back) credit card points from the bank on a monthly basis, and I use supermarket loyalty points for discounts at the supermarket (I do notice that there are no flybuys offers of discount wine redemptions at the moment, hmmm).

After my first trip to Italy in 2016, when I accumulated a few Virgin Velocity points from using Etihad (another airline on the brink), I did transfer some flybuys points over to Virgin Velocity to see if I could get a free flight somewhere. My experience with trying to redeem those as a flight left me underwhelmed, so I redeemed them as a gift card and bought myself a nice bottle of wine instead.

Similarly, when I travelled with Emirates six months ago, I was disappointed that I was not able to get any Qantas points for the trip with their global partner, but I was not distraught. The challenge of accumulating frequent flyer points through an actual flight, combined with the premiums and fees on converting bank or other loyalty points into frequent flyer points (my bank charges an annual fee if you want such conversions), means that the hassle is not worth it.

Getting value out of frequent flyer points is either a myth from a time over 20 years ago when those programs were more exclusive and special than they are now, or a contemporary labour on a Herculean scale, where all your guile and cunning and patience is needed to squeeze that value out.

But losing frequent flyer points is very much a First World Problem and one, if not to laugh about, then not one to gnash teeth over either. More serious is that Virgin will have a lot of customers who have paid money for cancelled flights, where the airline credits they have received in lieu will now be worthless. And far more serious than any of that are the consequences for the people who are going to lose their jobs.

Published by Ernest Zanatta

Narrow minded Italian Catholic Conservative Peasant from Footscray.

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2 Comments

  1. I woke last night mulling over a number of travesties in the world at the moment including Virgin going into receivership.

    With very few velocity points, the collapse doesn’t really affect me but has affected people I know who work for the airline including one who has been through this all before when they lost their job as a First Officer on Ansett.

    At the time, they were one of the lucky ones who managed to pick up a job with Virgin Blue some time months down the track, get promoted to Captain and eventually managed to get back most of their entitlements from Ansett.

    What is disturbing here is the mismanagement that occurred with both these airlines over a period of time that the general public was/has not been aware of and the response by some quarters suggesting that the government should bail them out.

    I am all for proper process and believe that the voluntary administration process should be allowed in the first instance to see if private enterprise can come to the rescue. I do not believe the government should be the first point to turn to.

    It is pretty clear that had Virgin acted a lot earlier there still would have been job losses and routes cut, perhaps not to the extent there will be going into the future. Sad for those employees that would have been affected but at least in it would have been in an environment where they may have had a better opportunity to find another job.

    Perhaps the time has come to look at executive level company decision makers being made personally liable for their decisions. A good deterrent for poor decision making.

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    1. Very true.
      I have never in my working life been responsible for running anything more than almost a year managing an $80 million turnover government-owned enterprise (we were turning a decent profit, depending on which accountant you asked), so I have no real idea on running a business. However, if someone is being paid a large amount (ie a factor of ten or a hundred of what I was being paid at the time) to run a business, and supposedly it is suddenly not all that viable, you have to wonder what the blazes they are doing.

      Like

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