The frequent flyer financial machine

The most instructive single fact about Qantas as a business is not its domestic profit margin, 16.1 per cent in the first half of FY24-25. ¹¹ It is not even the record underlying earnings of A$2.39 billion for the full year to June 2025. ⁶ It is what happened to Qantas Loyalty during the COVID pandemic. ¹⁴

In the financial year to June 2020, which ended with the Group's airlines in hibernation, Qantas's domestic and international flying operations saw profits fall by more than 75 per cent, and Group revenue fell 21 per cent. ¹⁶ During the same year, Qantas Loyalty recorded underlying earnings before interest and tax of A$341 million, down only 9 per cent, after a record first half. [14,16]

The planes stopped flying. The points kept selling, though in the second half revenue from points sales to external partners and other non-airline revenue was down 13 per cent. [14,16]

That resilience reveals the business model. On this outlet's reading, Qantas Loyalty is not a loyalty program in the way most people understand the term, a benefit for frequent customers, funded by the airline as a retention tool. It is closer to a financial services business attached to an airline. The ACCC says frequent flyer points are in many ways a form of currency created by an airline, which has significant control over their issuance and value. ²⁰ Qantas sells points to third parties such as credit card providers, and the ACCC lists banks, retailers, hotels and insurers among the partners airlines sell points to. [17,20]

01How the business model works

The mechanics are straightforward once explained. Qantas sells Qantas Points in bulk to financial institutions, retailers and other partners, which give them to their own customers. [17,20] Banks issue credit cards that award Qantas Points on purchases; Qantas says cards earning its points carried more than 35 per cent of all consumer credit card spending in 2024-25. ¹⁷ Woolworths is a long-term partner whose shoppers earn Qantas Points. [13,23] Hotels and holidays, including TripADeal, are among Qantas Loyalty's revenue streams, BP fuel was among the ways to earn points that Qantas named in 2020, and Qantas now counts hundreds of program partners. [14,17,22]

The bank or retailer pays Qantas for every point it issues to its customers, typically within normal credit terms after the points are issued. ¹⁷ That payment typically comes in advance of redemption, so it does not depend on whether the customer ever redeems the points. ¹⁷ When points are redeemed on a Qantas flight, Qantas provides a seat; the ACCC says airlines may primarily offer reward seats that would otherwise have gone unsold. ²⁰ Qantas's annual report says it estimates the proportion of points not expected to be redeemed, and recognises significant changes in that estimate within other revenue and income. ¹⁷ Its auditor calls that proportion 'breakage'. ¹⁷ The ACCC says an airline can unilaterally decrease the value of its points, by raising the points needed for rewards or tightening the rules on expiry, to reduce its redemption costs, though it risks losing active members if the changes are too adverse. ²⁰

In FY24, Qantas Loyalty generated revenue of approximately A$2.6 billion and underlying EBIT of A$511 million, a record. [1,2,18] That is a margin of roughly 20 per cent. ²⁰ On the ACCC's figures, its operating margin in the first half of 2024-25 was 19.1 per cent, against 16.1 per cent for Qantas Domestic. [11,15]

The value of this business was recognised as early as 2008, when JPMorgan valued the Qantas Frequent Flyer program at A$2 billion, more than a quarter of the airline's market value at the time. [4,27] Qantas explored a minority Australian initial public offering of the Frequent Flyer business that year. [4,24] It deferred the offering, saying it had regard to the condition of equity markets in a period of heightened volatility, and by its 2009 annual report had ruled it out, recognising the strategic value of the program's continued integration within the Group. [24,25] Qantas again assessed a minority sale of Qantas Loyalty in a structural review announced in December 2013. When the Board concluded that review on 28 August 2014, Qantas decided that Loyalty continued to offer major profitable growth opportunities and that there was no justification for a partial sale. [4,26]

Correction, 8 October 2026. The introduction said the airline received A$2.7 billion in taxpayer support during the pandemic; the source cited for that figure does not carry it, so the sentence has been removed. The section named ANZ, National Australia Bank, CommBank and American Express as issuers of Qantas Points credit cards; the source does not name them, so the sentence now refers to banks generally. It said the 2008 float was deferred due to the global financial crisis; the source for that sentence did not mention it. The float was deferred in September 2008, with Qantas citing volatile market conditions ⁴. The figures for the 2019-20 year (Loyalty underlying EBIT of A$341 million, down 9 per cent; Domestic down 78 per cent; International down 83 per cent) are now cited to Qantas's 2020 Annual Report ¹⁶.

Correction, 8 October 2026. This section said of the 2008 float that "It was never revived". The source cited ⁴ says Qantas again considered floating part of the loyalty business during a strategic review in 2013 and 2014, and that in August 2014 chief executive Alan Joyce said a sale was off the table. The sentence now says so.

Correction, 19 October 2026. This section said that when points expire unredeemed Qantas keeps the revenue from selling them 'without ever providing the benefit', citing a share-research website ⁵. That wording went beyond the source. Qantas's 2025 annual report says that Qantas Points are sold to third parties such as credit card providers, that payment is typically received within normal credit terms after issue, that it estimates the proportion of points not expected to be redeemed (breakage), and that significant changes in the estimate of points expected to expire unredeemed are recognised within other revenue and income ¹⁷. The text and the diagram now say that. The FY24 Loyalty revenue of approximately A$2.6 billion is the segment's total revenue and other income of $2,573 million in Qantas's 2024 annual report ¹⁸, now cited with the results release ¹.

Update, 22 October 2026. Reference ¹⁴, which pointed to an investment commentary site, now points to Qantas's own FY20 results release of 20 August 2020, which states that Qantas Loyalty achieved underlying EBIT of $341 million, 9 per cent lower than its result the year before. The pandemic-year figures in the introduction, the brief and the COVID resilience panel are now cited to that release and to the 2020 Annual Report ¹⁶. No figure changed.

Correction, 22 October 2026. This article cited an investment commentary site ⁵ for much of its account of how the program makes money. Those sentences now cite Qantas's own reports and releases and the ACCC's August 2025 airline report ²⁰, and several have changed. The summary under the headline said Qantas's real business is not flying planes; it now says, as this outlet's reading, that it is not only flying planes, and it no longer says enrolment makes the currency nearly unavoidable, which no source cited carries. The introduction now gives the description of Qantas Loyalty as a financial services business as this outlet's reading. The introduction said that in the year to June 2020 the planes were grounded and revenue collapsed; Qantas's 2020 Annual Report ¹⁶ says Group revenue fell 21 per cent, that the airlines moved into hibernation, that Loyalty had a record first half, and that second-half revenue from points sales to external partners fell 13 per cent. The introduction now says so, and the summary, the image caption, the key facts and the COVID resilience panel now name the year to June 2020. This section said a redeemed seat is usually one Qantas could not have sold at full price; it now gives the ACCC's statement that airlines may primarily offer seats that would otherwise have gone unsold. It said breakage creates a systematic incentive to make redemption harder; it now gives the ACCC's statement that an airline can decrease the value of its points to reduce its redemption costs, at the risk of losing members. It called the Loyalty division the Group's most profitable segment, citing the ACCC's May 2025 report ¹¹, which does not say so, and set Loyalty's FY24 margin against a domestic margin from a later half-year; it now gives that report's margins for the same half [11,15], and so do the key facts. The section on enrolment said retailers offering Qantas Points can reach every household in the country, that the lock-in effect is consequential for aviation competition, and that loyalty lock-in is a key component of Qantas's share of corporate travel. The ACCC said in 2021 that frequent flyer programs do not appear to have created a significant barrier to entry ²⁰, and it links Qantas's share of business travel to Virgin Australia's move to a mid-market offering in 2020 ¹¹; the text now says so, gives the lock-in as this outlet's reading, drops the household claim, and gives the 80 per cent corporate share as Qantas's own figure. The section on devaluation said most of the 2025 increases were between 5 and 20 per cent, a range Qantas's release does not give, and that the change was framed as a minor adjustment and was the second in the program's history; Qantas called it only the second increase since 2004 ²¹, and the text now gives Qantas's example and the ACCC's figure of 15 per cent, with the cut to Jetstar reward prices made at the same time ²⁰. It said the ACCC's May 2025 report noted concern about devaluation; that report does not discuss it, and the sentence now cites the August 2025 report, which does ²⁰. It said the February 2026 changes expand the program's non-aviation revenue base, an analysis that rested on a syndicated report alone and is not in Qantas's release ²²; it now gives what Qantas said, including that members will be able to roll over unused status credits ²². The section on the investment case said analysts value the airline's equity more as a loyalty business, and quoted the commentary site; both are removed, and the section now cites the ACCC [15,20]. It said the primary cost of the loyalty business is issuing points and its primary risk is redemption; the ACCC says the main cost is delivering the program's benefits ²⁰. The COVID resilience panel said banks kept paying Qantas for every card purchase; Qantas's FY20 release says consumer spending on credit cards softened ¹⁴, and the panel now says so. The final section said every major airline globally runs a version of the same model and that a consumer must fly Qantas to collect points efficiently; it now names Virgin Australia's Velocity ²⁰ and gives what Qantas says about status ²². The reference entries for the ACCC's May 2025 report [11,15] described it as saying things it does not; they now quote it.

Update, 22 October 2026. Statements that rested on Wikipedia [4,12,13] or on a syndicated news report ⁷ alone now also cite a primary or official source, or specialist press: Qantas's 2008, 2009, 2014 and 2025 annual reports [24,25,26,17], an InsideFlyer report of the 2008 JPMorgan valuation ²⁷, Qantas's releases of 22 January 2025 and 26 February 2026 [21,22,23] and the ACCC ²⁰. The September 2008 date of the float's deferral and the remark attributed to Alan Joyce in August 2014 rested on Wikipedia alone and could not be confirmed in a primary source, so the text now gives what the annual reports say: the 2008 plan was the minority initial public offering the 2008 report names, the float had been ruled out by the 2009 report, and the Board concluded the 2014 review on 28 August 2014 [24,25,26]. No sentence now relies on reference ⁵; it stays listed because the record above refers to it.

0217.6 million members enrolled

Qantas Frequent Flyer had 17.6 million members at June 2025, up from 16.4 million a year earlier. ¹⁷ On this outlet's reading, this scale is not incidental to the business model. It is the business model. The ACCC says frequent flyer programs can be an integral part of an airline's business model. ²⁰

A program with 17.6 million members is not a niche product for frequent flyers. It is infrastructure. ¹⁷ Members can earn points by signing up for and spending with co-branded credit cards, and by buying from partners such as hotels, supermarkets, car rental firms and insurers. ²⁰ Qantas sits at the centre of this ecosystem, paid by its partners for the points they issue. [17,20]

Whether the program's pull harms competition is contested. The ACCC says loyalty schemes have the potential to reduce competition if they make it difficult for other airlines to attract customers, but its March 2021 airline report found that frequent flyer programs do not appear to have created a significant barrier to entry. ²⁰ On this outlet's reading, a person who has accumulated years of Qantas Points, achieved Platinum or Gold status, and structured their credit card and retail spending around point accumulation faces real switching costs if they want to fly a different airline. The ACCC cites a US study which found that loyalty program members close to their next status tier paid on average 8 per cent more than others, because they were less likely to choose other flights. ²⁰ Those costs are not just financial: depending on the tier, status can bring lounge access, earlier access to upgrades, extra baggage allowance and priority check-in and boarding. ²⁰

As this series documented in Article 2, Qantas says it carries about 80 per cent of corporate segment traffic. ¹¹ The ACCC says Virgin Australia's move to a mid-market offering in 2020 is likely to have helped Qantas capture the majority of business-related travel after the pandemic. ¹¹ On this outlet's reading, loyalty plays a part too, and the ACCC notes that the pull of status can be even stronger when the traveller's employer pays for the flight. ²⁰ A business that sends its employees on Qantas builds status and points in those employees' accounts, since status credits are earned through flying. ²⁰ On this outlet's reading, switching the corporate travel policy to Virgin or an international carrier asks those employees to start again in another program.

Correction, 19 October 2026. This section, the key facts and the diagram said Qantas Frequent Flyer has more than 15 million members, about half the Australian adult population, and that about 20 per cent of New Zealand's population is also enrolled. The Wikipedia page cited ⁴ now gives neither share (it reports 18.9 million members at June 2026), and no source cited carries them. Qantas's 2025 annual report gives 17.6 million members at June 2025, up from 16.4 million a year earlier ¹⁷. The text now gives that figure with no share of the population, and the New Zealand share and the comparisons built on the Australian share are removed. That points and status create real switching costs is this outlet's reading.

03The devaluation problem

A private currency is only as valuable as the issuer is willing to make it. [4,12,20] Qantas, as the sole issuer and arbiter of Qantas Points, can and does change the value of those points unilaterally. [12,20,21]

In January 2025, Qantas announced that from August 2025 more points would be needed for Classic Reward seats and Classic Upgrades on domestic and international flights and on partner airlines; a Sydney to London Economy seat, for example, would go from 55,200 to 63,500 points. [12,21] The ACCC put the rise in starting Classic fares on Qantas flights at 15 per cent, from 8,000 to 9,200 points, and noted that at the same time Qantas cut the points for short-haul domestic Jetstar flights from 6,400 to 5,700. ²⁰ Qantas called the increase the first to Classic Reward seat pricing in six years and only the second since 2004. ²¹ In April 2024 Qantas had introduced the Classic Plus product: more seats available, but normally at higher points costs than Classic seats. [3,20] On this outlet's reading, the net effect for most members is more choice of seats, but at higher redemption costs. [20,21]

A private currency is only as valuable as the issuer is willing to make it. Qantas, as the sole issuer, can and does change the value of those points unilaterally.

The ACCC's August 2025 airline monitoring report lists point devaluation among the drawbacks of frequent flyer programs, and says members routinely express dissatisfaction when airlines make such changes; it also records that Qantas gives at least three months' notice of direct changes. ²⁰ The Ghost Flights scandal, in which Qantas sold approximately 8,000 tickets for flights already cancelled, added a further dimension: customers had accumulated points through a program while Qantas was simultaneously failing to deliver the service those points were meant to reward. ⁹

In February 2026, Qantas announced further changes, described by its chief executive as 'a new era' for the program, which will let members roll over unused status credits and earn them through everyday spending for the first time. [7,22] Qantas called this great news for its members and also its partners, who will benefit from the increased activity it creates. ²² From 2027 a single status credit target will replace the separate thresholds to attain and retain status, so Gold members will need 700 status credits a year to keep their tier, up from 600. [7,22] Qantas guided that Loyalty EBIT would grow 10 to 12 per cent in FY25-26. [7,23]

Correction, 16 October 2026. This section said Qantas announced in January 2024 that from August 2024 many Classic Flight Rewards would need up to 25 per cent more points, and that it introduced Classic Plus at the same time. The increase was announced in January 2025 and took effect on 5 August 2025, with most increases between 5 and 20 per cent (Wikipedia, reference 12). The Sydney Morning Herald of 22 January 2025 reported that Qantas called it the first Classic Reward seat pricing increase since 2019, and tied 'up to 25 per cent' to points earned on domestic flights, not points needed. Classic Plus was introduced in April 2024. The brief, this section, the key facts and the references now say so.

04The investment case: an airline, or a loyalty business?

The ACCC's reports bear on one part of this question. The ACCC says the Qantas Frequent Flyer program diversifies Qantas's revenue stream, leaving the total earnings of the business less exposed to the cost volatility of operating flights. ¹⁵ On this outlet's reading, the flying operations provide distribution and brand credibility for the points program, while the program provides steadier earnings than the airline business can.

This framing illuminates the domestic margin comparison from Article 1. Qantas Domestic earns a 16.1 per cent margin on a concentrated, low-competition market. ¹¹ Qantas International earns 7.1 per cent on a competitive market. ¹¹ Qantas Frequent Flyer earned 19.1 per cent in the first half of 2024-25, the half those margins come from, on a business whose main cost, the ACCC says, is delivering the program's benefits: airline lounges, reward seats and travel upgrades. [15,20]

The domestic flying business is profitable because competition is limited. ¹¹ On this outlet's reading, the loyalty business is profitable because 17.6 million members are enrolled in it and because Qantas sets, and can change, the terms on which they redeem their points. [17,20]

Update, 19 October 2026. The figure of 15 million Australians enrolled in this section now reads 17.6 million members, as in the section on enrolment ¹⁷.

05The rort

The frequent flyer financial machine is not illegal. It is not even unusual: Virgin Australia runs its own program, Velocity, which had 12.9 million members at December 2024 and in 2023-24 a higher operating margin than Qantas Frequent Flyer, 28.2 per cent against 19.9 per cent. ²⁰ On this outlet's reading, what makes the Qantas version distinctive is its scale and the market power of the airline attached to it. [11,17]

Millions of Australians are enrolled in a private currency issued by a company that also controls 63 per cent of domestic flights, has blocked a competitor's entry to the market, and has seen at least 90 per cent of federal parliamentarians declare membership of its Chairman's Lounge, a mechanism of preferential travel access. [4,6,11,19] On this outlet's reading, the loyalty program is not separate from the airline rort. It is part of its architecture. ¹¹

Status, and the benefits that come with it, has traditionally been earned only by flying, Qantas says. ²² To fly Qantas on domestic routes is to fly in a market where competition has been systemically limited. ¹¹ The points program's value proposition depends, in part, on Qantas's domestic pricing power, the same pricing power that produces a 16.1 per cent domestic margin while the competitive international business earns 7.1 per cent. ¹¹

The loyalty program is the reward Qantas offers for participating in the market it controls.

The loyalty program is the reward Qantas offers for participating in the market it controls.

If it's a rort, we cover it.

Update, 7 October 2026. Reference ¹⁰, which pointed to the High Court's homepage, now points to the Court's judgment summary in Qantas Airways Limited v Transport Workers Union of Australia [2023] HCA 27, and states only what that summary states. No sentence in this article cites it.

Correction, 19 October 2026. This section said that fifty per cent of Australians are enrolled in the program and that Qantas has cultivated personal relationships with 90 per cent of federal parliamentarians. No source cited carries the first share, and the second is not what the record shows: The Guardian's analysis of the parliament's register of pecuniary interests found at least 209 of the 227 members and senators in the 47th Parliament had declared membership of the Chairman's Lounge ¹⁹. The text now says millions of Australians are enrolled, and that at least 90 per cent of federal parliamentarians have declared Lounge membership.