Flight rewards returning to favour

During the height of the GFC, there was a definite pattern in consumer credit card behaviour. Many people were opting for simple, economical rewards for their credit card spending, such as retail vouchers or cash they could use to pay off their existing debts, or put towards emergency savings. Flight rewards took a noticeable dive during this time, as many held off on holidays during this time of crisis.

As we are finally beginning to see the light at the end of the GFC, we are also seeing an improvement in consumers' attitude on flight rewards. Many people are starting to take the holidays again and are using their rewards points to make this more affordable.

POPAI Australia & New Zealand quoted studies that showed a significant increase in consumer spending in the past twelve months. Stuart Langeveldt, Head of Marketing and Communications at AMP Capital, predicted that in 2010 consumers are more likely to spend big on holidays that they shied away from during the GFC; with people in Sydney being the most likely to travel to overseas destinations.

While shoppers are willing to spend more on holidays and flights than they were twelve months ago, POPAI warned that many consumers are still cautious about what lies around the corner. For this reason, Australian Tourist Councils reported that many Australians are taking their long-awaited holidays now, in the form of longer, domestic breaks; a cheaper and cost-conscious alternative to the expensive 10 day overseas holiday.

Frequent flyer options

The most simple type of credit card rewards are ‘direct-earn’ programs, where the reward points earned are directly redeemable through either Qantas Frequent Flyers or Virgin Blue Velocity points. More complex are the ‘multi-purpose rewards’ which offer the option to redeem reward points through a multitude of frequent flyer partners.

Each of these methods of rewards has their own benefits and downfalls. The direct earn approach is simple and transparent; allowing the owner to know exactly how many points they are earning with each purchase, without having to convert to frequent flyers and lose points in the process. This, however, is at the cost of only being able to redeem rewards through one outlet and company.

The multi-purpose approach is not restricted to one style of reward; allowing redemption of rewards through a variety of outlets including cash, vouchers, merchandise or flights through a greater number of companies. This in itself is a benefit over the direct earn approach, as a greater number of frequent flyer partners opens up more opportunity to book the flights you want, when you want.

Additionally, some rewards programs allow points to be redeemed through travel agents, giving even more options. CANSTAR CANNEX has made changes to the rewards methodology to recognise rewards programs that offer multiple frequent flyer partners, or allow points to be redeemed through travel agents. For each of the six flight routes we assess on the pricing side, we now use the most affordable option out of six possible frequent flyer partners. We also allocate more feature points based on the number of frequent flyer partners options, and travel agent partners.

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