Key Points
- The value of airline or frequent flyer points can differ significantly depending on how they're used.
- Points earned grocery shopping can be worth up to four times as much if converted to airline points.
- While there is good value to be found in business class reward seats, they can be few and far between.
How to get the best value from your purchases isn't always easy to discern.
While the value of petrol is spelled out clearly, with its price per litre advertised on signs outside petrol stations, the value of loyalty points programs is not so obvious.
Points, which may also be called miles or something else completely, are earned at different rates and their worth can differ depending on the company they're associated with and what they are redeemed for.
To find out the actual value of these points, SBS News spoke to travel expert and editor at comparison website Finder, Angus Kidman.
Loyalty programs
Airline loyalty or frequent flyer programs encourage members to accumulate points to be redeemed for air travel or other rewards.
Financial institutions and the country's two major grocery chains — Woolworths and Coles — also offer points for people who sign up for certain credit cards or products, and for purchases made with them which can be redeemed for travel airline points.
A Finder survey found Qantas' Frequent Flyer was the most commonly used Australian loyalty program, followed by Flybuys, which operates through Coles stores, and then Virgin's Velocity Frequent Flyer.
A YouGov survey released in November which also took international airline points programs into account listed Singapore Airlines and Emirates Skywards programs in third place to Qantas and Virgin in terms of Australian members.
Loyalty points provide more value when booking certain types of tickets for flights. Source: Getty / Tang Ming Tung
How the different programs stack up
According to Finder, points earned with Virgin and Qantas are generally worth the same amount.
In both programs, 1,000 loyalty points equate to $20 towards a flight with either airline.
Earning 1,000 points with American Express may equate to a value of between $2 and $6 with airlines like Air New Zealand, Emirates, Qatar, Singapore and Etihad. Points earned with the 'big four' banks are worth between $2 and $4.
Source: SBS News
Every 1,000 points equate to $5 of in-store credit. However, Kidman said those who fly at least semi-regularly could make those points go further by putting them towards a flight.
"You can actually get more dollar value from converting your Flybuys or [Woolworths'] Everyday Rewards into frequent flyer points than by using them directly with the supermarket to get you $10 off for every 2,000 points."
"You'll often end up getting more value per point than if you spent them on supermarket rewards," he said.
Source: SBS News
"The bank rewards schemes to frequent flyer points, that's not the most efficient way [compared to] earning the points directly with that airline," Kidman said.
"There's normally some conversion loss in that. So it might be that for every one point you had in this scheme, you get 0.75 points with an airline. So there sometimes can be some value loss.
Kidman pointed out that the value in the points accumulated was only really "value" if people didn't spend extra money to earn those points.
"I tell people to earn points on what you're going to be spending anyway. The point is to get something extra for spending what you would regardless," he said.
A closer look at Qantas Frequent flyer points
According to Finder, the median value of one Qantas Frequent Flyer point is two cents, but that value changes depending on how a member uses their points.
Kidman said the value of one Qantas point could range from 0.35 cents and 8.5 cents, depending on how it is used.
Finder travel expert Angus Kidman says people who are going to be booking flights anyway will get better value for money using loyalty points on flights than on grocery shopping. Source: Supplied / Finder
For those who do come across available business class reward seats, one point will generally be worth between 3.5 cents and 6.5 cents.
When booking an economy reward seat with Qantas, one point is generally worth about 1.3 cents and 4.5 cents.
Third-party purchases such as car hire, purchases through the airline's online store and donations typically provide the least monetary value for the points used.
Kidman said options to pay for a portion of a ticket and use points for the remainder were "really bad value in terms of using your points".
The reality of redeeming airline points
The value of points means Qantas or Velocity members would need to have about 20,000 points to secure .
But just how available are reward seats on offer to loyalty program members? That question was raised during a .
A number of submissions to the inquiry raised concerns about a perceived reduction in how many seats airlines set aside for people to book using points.
"The major Australian airlines are only going to allocate a handful of direct reward seats on each flight they operate. It's not normally the case that anything is available as the cheapest kind of reward seat," Kidman said.
"There are only going to be a handful of those on each flight, and even fewer if you're looking in the more expensive classes [such as] business domestically, or business, first or premium economy internationally."
Kidman said while many people often thought of points programs as a way to get business class flights, he said due to the limited amount of seats offered by airlines that can be booked using points, it was often very difficult to secure them on the routes people want.
"The secret to getting the most out of your points is to get those classic reward flights in economy and plan ahead for them, as it's difficult to get a last-minute flight using points at a decent reward level," Kidman said.
He said people were most likely to find reward seats when they are first released, which is usually somewhere between 11 and 12 months ahead of time.
Neither Qantas nor Virgin Australia responded directly to questions by SBS News about the seats they offer as reward seats, but it's understood a limited amount of seats on 80 per cent of Virgin flights are made available to be redeemed with points.
Kidman said while airlines initially began their points programs in an effort to keep customers loyal to their airline, this had changed over the past two decades, to the point where programs had become businesses in their own right.
"Frequent Flyer is a business, or 'Loyalty' as Qantas labels it internally. It's a separate profit centre and they make money themselves because when they partner with other businesses to offer points, such as earning Qantas points from paying your electricity bill, those businesses have actually purchased the points and Qantas is getting income from those directly," he said.
