Justin Grey chats to Steve Hui, whose Sydney small business aims to show Australia the true value of frequent flyer points.
Most of us don’t see the true value in frequent flyer rewards programs. But there is value to be had in managing your rewards points, and a new small business is helping business owners unlock that value.
Sydney-based Steve Hui chuckles at the suggestion that there are more than a few similarities between himself and George Clooney’s Ryan Bingham from 2009’s Up In The Air. Steve has a long-held fascination with flying – and more to the point, flying comfortably, and knowing how to best do so using frequent flyer rewards programs.
A CPA by trade who spent a decade working in senior accounting and finance positions at MacQuarie Bank, in 2012 Steve’s passion for and knowledge of aviation travel led to him launching iFLYflat. A unique business in a niche market that literally didn’t previously exist, iFLYflat offers a consulting service that helps individuals maximise the value of frequent flyer rewards programs.
The seed for what would become iFLYflat was sown seven years ago when Steve flew Business Class for the first time. “I realised how amazing Business Class was,” Steve recounts. “I was accumulating these points at a fast rate, so that’s when I started researching and investigating how this whole this [rewards points system] worked. And I got addicted to it, because there was so much potential.”
Steve soon found online forums, full of individuals afflicted with the same addiction, where tips and advice about how to maximise the value of rewards points programs were discussed and traded in depth. Through oodles of research, Steve became adept at extracting maximum value by customising and carefully choosing which rewards points programs he himself used.
He began passing this advice on to his mates, and soon after tied it all together as a commercial service under the iFlyFlat name. “I completely just constructed this – no-one’s ever made this into a service and offered it to people who may not be interested in reading hundreds of pages of forum comments and trying to learn it,” he says.
Steve likens frequent flyer rewards points to a virtual currency, but he suggests that’s most Aussies don’t appreciate the value of such points. As such, he believes iFLYflat offers essentially a financial planning education service aimed at getting people to think strategically about something they likely wouldn’t bother to think strategically about otherwise.
“Flybuys were really the first kind of rewards points program in Australia, but the return is so, so low, and I think that just set the scene for Australians to think that frequent flyer points are really poor value,” he explains. “If you don’t realise their value, you won’t be bothered to collect them.
“I think a lot of people have different expectations – they collect the points, and then go, ‘Now I want to use them’. Points are like money, but their rating is lower than money. I just want people to be more conscious about the opportunity to earn these points.”
HOW IT WORKS
Steve operates iFLYflat as a flat rate membership-based service – the most popular option being the Sole Trader package. Essentially, individuals wishing to use the service tell Steve they spend X amount of money a year (ie, on business expenses) and would like to fly to X destination. He then advises which airline is best to earn rewards points to use towards that flight, and which financial institution they need to open an account with to access the rewards program to most efficiently earn those points. Technically iFLYflat isn’t licensed to recommend credit cards and customers are required to their assess their own credit situation before opening a new account to gain points.
Steve says that if a customer spends $80,000 a year (on anything) using the suggested credit card – which isn’t much at all for a business owner with general business expenses – by following iFLYflat’s advice that spending would gain the user around $4,000 worth of points.
“A misconception is that you have to spend it on travel, but you don’t,” he explains. “You can spend $80,000 on anything you can put on your credit card. That’s the minimum amount where we know we can offer value. So, spend $80,000 paying your bills on credit card and you have a preference to fly First or Business Class. $80,000 can translate to about 80,000 points, or 120,000 points, depending on what card you use. And 80,000 to 120,000 points will get you a business class trip to Asia, which is worth about $4,000.”
Given that iFLYflat memberships costs around $1,300, that return is certainly worthwhile. “One of the key things why I started the business is I heard of people redeeming 120,000 points for an iPad that’s worth $1,000. They could’ve easily used those points to fly to Hong Kong or Singapore, which is a ticket worth $4,000. So I’m just conscious that people understand what they’re redeeming their points for. If they’re happy with an iPad, then happy days, but just know that you could’ve got a trip to Asia for the same thing.”
BUSINESS OWNERS ALL OVER IT
Of iFLYflat’s 200 plus members, Steve says a massive 80 per cent are business owners. “Some business owners are flying overseas to see their customers more often, or employees,” Steve says. “We’ve helped people fly their kids from somewhere to somewhere. We’ve flown in-laws into Melbourne for Christmas family gatherings.
“We don’t mind what customers do with their points, we just get them for them. You just have to target your plan – if you want to go to Hong Kong, then Cathay Pacific points are the ones that you should focus on because it’s cheaper to fly [to Hong Kong] with Cathay compared to Qantas.”
Steve credits most of iFLYflat’s growth to date to word of mouth marketing, and for 2015 a referral campaign is in the works. “The service we provide is like funds management, but with points. It’s a new concept. It’s a worthwhile service, so in 2015 we’ll just be pushing it and encouraging people to be smarter with their points.”
This feature was originally published in the February 2015 print issue of My Business. To read more in-depth features for SME business owners immediately upon publication, subscribe to My Business magazine now.