Credit card rewards: Nicola Field Qantas FF versus Velocity points

How to make the most of your rewards and navigate the traps

You’ve built up a stash of frequent flyer points and now you’re ready to cash them in. Checking out the rewards on offer is like being a kid in a candy store, except in this shop some deals are sweeter than others. There is a whole variety of ways to use frequent flyer reward points – from flights and upgrades to gift cards and products. However, the trick is to put “rewards” back into points redemptions, and according to Steve Hui, CEO of iFLYflat, that means knowing where to get the best bang for your buck.

Redeeming points for flights

Airlines are in the business of putting bums on aeroplane seats, so it’s no surprise that redeeming points for air travel delivers great value. But be sure to book the tickets using “classic rewards” not “points plus pay” to get the most rewards – both options are clearly highlighted when you go to book flights.

According to Hui, both the Qantas Frequent Flyer (QFF) scheme and Virgin’s equivalent, Velocity, have a two-tier approach to redeeming points for flights. Under the Qantas points plus pay option the number of points needed to book a flight will fluctuate depending on the daily airfare. Yes, you’ll still enjoy a freebie but you won’t pocket the extra value that loyalty schemes are fundamentally all about.

Hui says classic rewards offer considerably more value. The number of points needed to book a seat is fixed regardless of the time of travel. More importantly, Hui notes, “The number of points needed to pay for a flight through classic rewards is always lower than the points required by points and pay.”

By way of example, Hui says on a given day it could take 110,000 QFF points to book two economy class Sydney-Melbourne return tickets using points plus pay. On a different day, the same trip could take 125,000 QFF points. Using classic rewards, however, you’ll always

have a fixed rate of just 64,000 points to pick up two business class tickets for that same trip. Yes, business class for fewer points than economy! Do note, all the points quoted here exclude carrier charges and airport taxes – see box on next page.

In fact, using points to book business class seats instead of economy can really ramp up the value. As Table 1 shows, return economy fares from Sydney to London can cost around $2000 with Qantas. Or expect to pay $8500 – four times as much, to fly business class. Using QFF points, you’ll need 120,000 points for the economy seat or 256,000 points for a business class seat, which is only twice as many points.

It means that for every 1000 points used, you’re getting approximately $17 worth of value to fly economy compared to $33 worth of value flying business. In other words, using QFF points to fly business class doubles your value. If you want to look at it another way, 100,000 QFF points give you around $17,000 in value if you fly economy but $33,000 in value if you fly business class. A no-brainer, right?

According to Hui, this 2:1 ratio of better value for business versus economy generally holds true for international flights across QFF, Virgin Velocity and other airline’s frequent flyer programs. However, the rewards really escalate when points are used to book business seats on domestic flights. A Sydney to Melbourne flight, for instance, can deliver $13 worth of value per 1000 QFF points for a seat in economy. Or get $47 in value for the same trip taken in business class. The downside is that you’re using precious points to fund what is typically a very short flight.

Watch for the timing trap

Bottom line is: select classic rewards and head for business class seats to maximise value on your points. However, there is a catch. Hui explains: “Airlines issue only a limited number of seats for passengers paying with classic reward points.” Moreover, the availability of classic reward seats can change in line with the number of passengers who’ve paid hard coin to secure their ticket. “Finding classic reward seats to your preferred destination is a bit like fishing,” says Hui. “You know the seats are there, you’ve just got to spend time looking for them and act fast when you find them.”

It also pays to be flexible. Instead of trying to book a return ticket in one transaction, it can be better to book a one-way ticket when you find it, and then book your homeward journey ticket when you find the right seat at a later stage. “If you wait for both the forward and return tickets to become available at the same time, you may never find them,” explains Hui. A possible solution is to use flight booking services offered by the likes of iFLYflat, who can track down the best flights for reward points in return for a flat booking fee.

Flight upgrades

What about using your points to upgrade your seat? Hui says, “People often see upgrades as offering good value – and they may have done so years ago but that’s not true today.”

On a Qantas round-trip flight from Sydney to London, it’s going to cost 240,000 points to upgrade from economy to business class. Yet it would only take 256,000 points to book a business class flight in the first place. This means the upgrade only provides roughly $27 worth of value per 1000 points used. (See Using Points for Flight Upgrades, on page 54.)

The system does have some quirky bright spots though, for instance if you’re flying domestically. An upgrade for a Sydney to Melbourne flight, for example, will provide $65 of value per 1000 points – far higher than the $47 per 1000 points if you booked a business class seat from the beginning.

Gift cards and products

Hui says gift cards are a very popular reward, ranking as one of the top five choices but they don’t offer great value. The reason is simple. In order to provide gift cards and products, the airlines first need to pay for them, which brings an additional cost to cover. The upshot is that these redemptions aren’t as rewarding as flights or upgrades.

By way of example, a $25 Harvey Norman gift voucher will set you back 4170 points. That means getting less than $6 in value per 1000 points. Or you could use 231,970 points to buy a Callaway X Series N18 golf kit – retail value of $1500. That would give you just $6.47 worth of value per 1000 points.

Hui notes: “Once in a while a product will be offered for heavily discounted points but even then it’s still not good value.” By way of example, in early October 2018, a QFF member could pick up Smeg appliances for 40% fewer points than normal. A snazzy Smeg espresso machine, with a retail price tag of about $400 was available for 52,470 points (down from 87,450). Even at this rate, the deal provides $7.40 in value per 1000 points. Remember, using points to fly economy or business, or to book an upgrade gets you in the range of $13 to $66 in value per 1000 points.

Nonetheless, as Hui notes: “The product is free anyway, and if you don’t have plans to fly you need to think about when you’ll use the points.”