Lucia Stein* says it’s worth asking yourself whether it is worth the effort (and sometimes cost) to try to accumulate frequent flyer points.
For fly-in, fly-out worker Brett Sharpe, being a frequent flyer member means he gets the chance to upgrade to business class every now and then.
“If you travel regularly and go on holidays, it’s nice to get lounge access or an upgrade to business,” he said.
But Mr Sharpe is lucky enough to not have to be too diligent about earning the points.
Instead, he accumulates them by providing his details to his employer, who books his flights for work trips.
But for those of you who don’t fly regularly, you may be asking yourselves whether it is worth the effort (and sometimes cost) to try to accumulate frequent flyer points.
That’s why we’ve had a look.
What’s the idea behind airline points?
According to Choice travel expert Jodi Bird, they started off as loyalty schemes to reward customers.
But these days, they’re genuinely an alternative revenue source for the airlines.
“They can be quite difficult to get value for money on,” he said.
Swinburne University Professor Steve Worthington agrees, arguing that it’s also a way that airlines are able to gather data about their customers.
“And it encourages loyalty from us to them, so we continue flying with them rather than their other competitors,” he said.
Is being loyal enough to earn points?
While you can earn points by flying with a certain carrier or shopping with a particular retail outlet, it may not be enough to bank a lot.
You may need to be a bit more points savvy to actually earn enough to regularly get discounts on flights.
According to Choice, if you’re flying with Virgin, you can earn points the following ways:
- Domestic flights: Five points per $1 spent, which can be increased if you have more status credits.
- International flights: Points are earned based on how far you fly as well as how much you spend (fare class).
- Partner airlines: If you fly with affiliated airlines you can earn points, but they can be quite low.
It’s a similar scheme for Qantas, but it has a minimum point guarantee.
Currently that’s about 800 points per eligible economy flight, and you can earn Qantas points based on a mix of how far you fly and how much you spend.
You can also earn points through credit card schemes and retail partners.
What are they worth?
It depends on how you spend your points.
Mr Bird said the value of a point can vary.
But based on “quite rough” calculations, one point is believed to be worth about one cent.
“We have seen points lose value over time,” he said.
Professor Worthington has also noticed that points tend to be worth less over time, while the number of points you need for a particular flight increase.
So is it worthwhile?
According to Professor Worthington, it comes down to what you spend your points on.
“My personal view on this is if you’re in a loyalty system, you might fly with somebody or go to one particular shop quite frequently, so why not get a little extra out of it?” he said.
“But don’t rely on it to be a great money spinner in the long-term.”
“Cash your points in when you can, but above all, look around and see what’s the best value in shopping around elsewhere.”
Canstar financial services spokesperson Stephen Mickenbecker believes the rewards can be worthwhile.
“I know a lot of people say they’re not, but they are – you’ve just got to be in the right category,” he said.
“So, they very much make sense for the right person, who’s got the right repayment habits, so they’re not leaving any debt on their card and someone who is spending a lot of money on their card.”
For example, Mr Mickenbecker said some families might find they are spending up to $60,000 on a card and therefore could benefit from being able to accrue points.
But it doesn’t work for everyone, especially those who aren’t spending a lot or who struggle to make repayments.
Mr Bird believes they can be worthwhile – as long as you’re getting back more in equivalent rewards than what you’re paying to earn the points.
“[But] it’s almost like going to the casino and trying to play blackjack,” he said.
“The people who spend a lot of time in it and come up with a system, often can … get something out of it.”
“Everyone else basically just subsidises those smart people.”
What’s the best value for money?
Mr Bird said seat upgrades generally offer the most value.
“Products tend to be worth the least, then flights, then seat upgrades,” he said.
Mr Mickenbecker agrees, ranking shopping vouchers as the next “valuable” item:
- Flight rewards – with seat upgrades providing better value over flights themselves.
- Taking out shopping vouchers.
- Merchandise.
- Cashback on your card.
But if you are looking to get the most value out of flights, Mr Mickenbecker said it could come down to how long it takes you to accrue points.
“Take your domestic trips, don’t wait around for an overseas holiday if it’s going to take you four years to save up,” he said.
“By then it might not end up being worth the same amount of points.”
* Lucia Stein is a digital journalist (mobile) at ABC News online. She tweets at @luciastein.
This article first appeared at www.abc.net.au/news
