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Reconsider using your frequent flyer points on products

Adam Zuchetti
Adam Zuchetti
25 September 2019 2 minute readShare
Qantas and Virgin Australia Velocity Frequent Flyer cards

Australian frequent flyer points website Point Hacks is warning business travellers against redeeming their points to buy products, suggesting there is often better value to be gained elsewhere.

The site compared the cost in points of nine everyday products listed on both Qantas Shopping and Virgin Australia’s Velocity eStore, and compared them with the cost of six well-travelled flight routes.

It then calculated a “point value” of cents per point to compare the points-based cost of each purchase.

The products examined were:

  • A $50.00 Westfield gift card
  • A Desley 68cm Montrouge expandable trolley case
  • A NYE stay (31 December 2019 to 1 January 2020) at the Sofitel Gold Coast, either double or twin classic
  • Standard car hire for three days
  • A 32GB iPad
  • A Bose SoundLink Revolve speaker
  • A Breville Bit More Plus two-slice toaster
  • A pair of Bose SoundLink around-ear headphones
  • A DeLonghi-Nespresso Citiz & Milk coffee machine

Meanwhile, the international flights used in the analysis were:

  • Sydney to Hong Kong economy, flying Virgin Australia
  • Sydney to Hong Kong return business class, flying Virgin Australia
  • Melbourne to Sydney return economy, flying Qantas
  • Melbourne to Sydney return business class, flying Qantas
  • Sydney to LA return economy, flying Qantas
  • Sydney to LA return business class, flying Qantas

Flights generally offer better value

Needless to the points per dollar value was low, as every frequent flyer knows only too well. Yet there was (slightly) better value for money on most of the flights compared with the products.

Point Hacks found that the products delivered a point value of 0.3 to 0.64 cents per point when used to buy products. Flights, meanwhile, had a point value of between 0.58 cents and a (comparatively) large 4.7 cents per point.

The site’s spokesperson, Daniel Sciberras, said the analysis reinforced the often-held view that there is better value to be had from redeeming frequent flyer points on other flights.

“Redeeming points on products generally [isn’t] good value compared with flights, especially long-haul international flights in premium cabins,” he said.

“You should be looking for at least 2 cents per dollar for an ideal redemption value, and this isn’t something you are likely to get with products. Most of them fall between 0.4 [and] 0.8 cents, while flights are between 1.5 [and] 14 cents per point.”

Not always the case

However, Mr Sciberras did go on to say that this is not always a hard and fast rule.

“When your points are about to expire and you aren’t looking to fly anywhere soon, or for those who don’t particularly enjoy flying, my suggestion is to purchase products when they are on sale in airline rewards e-stores, where you will use at least 35 per cent less points,” he said.

“For example, a Delsey trolley case and a DeLonghi Nespresso machine can each cost almost half of their original price in points during a promotion period.”

And when comparing the two airlines’ online stores, which delivers the better value?

“Although the value per point between Qantas Shopping and Velocity e-Store is similar, overall, shoppers will likely get a better deal when purchasing products through Qantas Shopping, as six out of the nine products analysed have a higher cent-per-point value on that platform,” he said.

Best and worst-value items

In case you’re wondering which of the items tested delivered the best — and the worst — value, the highest cent-per-point value ratio went to the business class Qantas flight between Melbourne and Sydney, at 4.7 cents per point.

In fact, all of the flights, except for Virgin Australia’s economy roundtrip from Sydney to Hong Kong, had a value higher than 1 cent per point. That was a feat that none of the products came anywhere close to matching.

The best-value product was the car hire, with Velocity offering 0.71 cents per point and Qantas 0.64 cents per point. But if the expandable trolley case took your fancy, you may want to think again — it delivered the poorest value on both rewards schemes, at 0.3 cents per point with Qantas and 0.27 cents per point on Velocity.

Reconsider using your frequent flyer points on products
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Adam Zuchetti
Adam Zuchetti

Adam Zuchetti is the former editor of MyBusiness and a senior freelance media professional, specialising in the fields of business, personal finance and property. In 2020, he also embarked on his own business journey – inspired in part by the entrepreneurs and founders he had met through his journalistic work – with the launch of customised pet gifting and subscription service Paws N’ All.

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