Qantas stays loyal to its frequent flyer "cash cow"

Qantas stays loyal to its frequent flyer "cash cow"

AUSTRALIA - Australia's flagship airline, Qantas Airways Ltd, is making a mint helping other companies keep their customers - even as it struggles to retain the loyalty of its own.

Hiding behind Qantas' staggering A$2.8 billion (S$3.3 billion) headline annual net loss announced last week is a hugely profitable loyalty programme that is the envy of the airline world - and the carrier isn't letting go.

Some investors have urged Qantas to sell all or part of Qantas Frequent Flyer, which is valued as high as A$3 billion. Rival carrier Virgin Australia Holdings announced on Friday it was offloading a stake in its loyalty plan. "The Frequent Flyer programme isn't a 'cash-in' for Qantas, it's a cash cow," said Steve Worthington, a marketing professor at Melbourne's Monash University. "They were the first mover in the domestic market and their programme runs far deeper than any other." Qantas Frequent Flyer boasts more than 10 million members - almost half the Australian population - in a programme that goes well beyond the traditional loyalty schemes that award points for travel and credit card services.

Qantas offers consulting services, data mining and even runs gift card programmes for top Australian retailers, giving the airline such an extensive reach that its loyalty points are often referred to as the country's de facto second currency.

The airline's loyalty division was the only ray of light in an otherwise gloomy earnings report last week. The unit posted its fifth straight year of double-digit earnings growth to hit a record underlying profit of A$286 million.

Chief Executive Alan Joyce said last week the airline had ruled out a partial sale of the loyalty division after a long-awaited review of the business. "This business is a great business," he said. "We believe there is shareholder value still for us holding that business."

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