Exclusive – Qantas Domestic CEO: “we’re not considering a revenue-based program”

POINT HACKS EXCLUSIVE | All eyes have been on Velocity Frequent Flyer recently, with its drastic changes to loyalty. From October, rather than earning Velocity status based on the distance and fare type flown, the main driver will become spend. But the design of Velocity’s new program will fall short for some frequent flyers – potentially diverting revenue to its rival, Qantas. Compared to today, many Velocity members will need to spend significantly more on travel each year to continue enjoying the perks they’ve become accustomed to.

We’ve heard many readers express that Velocity is pushing things too far. Particularly with Virgin Australia’s much smaller network of international flights and partners, compared to Qantas. Not to mention, the inconsistency of benefits given when travelling on those partners. But where does that leave things for the Red Roo?

In aviation, it’s very common for one airline to act, and another airline in the same market to follow. But would Qantas take a page from Virgin Australia’s playbook here, and chase a similar spend-based path? I put the question directly to Qantas Domestic CEO Markus Svensson at the CAPA Airline Leader Summit in Cairns, to find out.

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Would Qantas Frequent Flyer adopt Velocity’s revenue-centric model?

The million-dollar question, literally, is this. Would Qantas tinker with its current tier structure, to make status less about flying, and more about buying? Svensson boldly confirms, “We are not considering a revenue-based program. I can confirm that.” (Phew!)

I ask whether Qantas is starting to see any sort of uptick from disgruntled Velocity members jumping ship. “We are monitoring our share both in the corporate and the small-to-medium enterprise market, and we are doing really well in that space,” he hints.

“You talked about status. We do our (double) status campaigns (and status matching/challenges). We know they’re highly successful, and we know they’re very valued by tiered customers – our tiered frequent flyers.”

But what do Qantas’ core customers value most highly, once they reach those lofty heights? “They want the frequent flyer benefits. They want the lounges – and I think that’s probably … even more important now (than pre-COVID). But I think if there’s one (thing above all), I would say, it’s generally time.” It’s a hint to Qantas’ investments in the IT space, whereby its customers can book the vast majority of partner airline flights online. Combined with the premium and VIP call centre services for the airline’s most highly travelled customers.

“You talk about (other) airlines. People’s expectations (have) definitely increased, which, I think, is a good thing. That’s pushing us to be better all the time.”

Meanwhile, Velocity has quietly begun a limited trial of Platinum Plus membership with an invited group of frequent flyers. It’ll be the airline’s competitor to Qantas Platinum One. Time will tell whether the benefits at this new tier will keep Virgin Australia’s highest spending customers loyal.

Also read: Velocity dials back (some) upcoming changes to Status Credits