Who really wins with frequent flyer programs?

When Qantas announced profit results last month, it revealed it had earned $328 million, before tax, from its frequent-flyer program. The program was one of the standout performers for the airline group, raising the question: for whose benefit is it designed?

Are frequent-flyer programs really about loyalty and benefits for travellers or just another money-spinner for airlines? And if the airlines are making so much money from them, who is ultimately paying?

Clifford Reichlin, who runs the popular online forum frequentflyer.com.au, says frequent-flyer programs have little to do with loyalty – or even flying. “It’s nothing to do with flying, it’s a promotional and marketing currency,” Reichlin says. “You can earn points without flying and you can spend points without flying. “It’s a promotional currency which is linked to the whole aspirational quality of flying.”

Reichlin says frequent-flyer programs are hugely profitable for airlines due to a combination of “enormous demand” and having control over supply. “They get cash for the points [from banks] and then they control the supply of seats,” he says. Reichlin says while the benefits of frequent-flyer programs are clear for the airlines, the benefits for consumers can be patchy. While some do very well out of the programs, for others it may not be worth the bother. “It depends on… (please click here to keep reading this article by Jane E. Fraser)