Qantas CEO Vanessa Hudson has pledged to revamp the company’s loyalty program in what could be its most substantial overhaul yet.

The proposed changes, expected to be branded as Classic+, aim to enhance customer engagement and alleviate frustration among frequent flyers who have faced challenges in redeeming their points for flights since the easing of COVID-19 restrictions.

According to sources close to the discussions, not authorized to speak publicly but cited by The Australian Financial Review, the new scheme is likely to convert one Frequent Flyer point to 1¢ for economy flights.

While the conversion rate is anticipated to be more favorable for higher cabin classes, at its core, it would mean that a $100 flight would cost 10,000 Frequent Flyer points under the proposed system.

Enhanced engagement

Traveller dissatisfaction with the Qantas Frequent Flyer program has been mounting, particularly as customers encountered difficulties in utilizing their points to book flights post-pandemic.

The anticipated changes are poised to enhance engagement with the loyalty scheme, which generated $1.27 billion in revenue and $270 million in earnings in the six months leading up to December 31.

During discussions on the company’s first-half performance last month, CEO Vanessa Hudson disclosed that $50 million, out of the $230 million allocated for improving the customer experience, would be directed towards the loyalty division, including Classic Rewards.

Steve Hui, CEO of iFlyFlat highlighted the frustration among many of Qantas’ loyal customers who have struggled to find Classic Rewards seats.

He suggested that the proposed changes to the scheme primarily target investors rather than customers, raising questions about its value proposition for consumers.

Despite concerns, Jefferies equities analyst Anthony Moulder noted in a recent client note that the number of Qantas Frequent Flyer members has surged by 76.7% since 2012.

However, the number of Classic Seat redemptions has only marginally increased from about 4 million to approximately 5 million. Qantas intends to maintain the number of Classic Rewards seats at 5 million.

While addressing shareholder skepticism, particularly regarding the company’s earnings margins, Qantas reassured that the frequent flyer improvements are still in progress.

The airline said its commitment to delivering value for its members while aligning the program with the needs of both customers and partners.