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Qantas has warned almost 900,000 customers that it will cancel flight credits accumulated during COVID-19 at the end of 2023.
The airline is likely to face huge criticism if it goes ahead with the decision to allow the credits to expire, given airfares are now at record levels and capacity is still down on pre-pandemic levels.
The Flying Kangaroo said on Thursday it would offer passengers with “COVID credits” double loyalty points to entice them to book flights.
“The data shows most customers have already redeemed their COVID credits, but there’s still a significant number who are yet to put them to use,” said Markus Svensson, Qantas’ chief customer officer.
“Our systems were never designed to unwind literally millions of bookings due to a pandemic, and there have been some obvious challenges for us and for customers that we’ve worked hard to fix.
“We’re committed to reminding customers to use their credits over the next year. Throughout the pandemic, we’ve made using travel credits easier, including extending their expiry, and we’re now encouraging the remaining customers to put their travel credit towards their next holiday.
“We know that people start planning their next holiday while they are on their current one, which is why we’re launching this offer at the start of the Christmas break.
“With our operational performance now effectively back to pre-pandemic levels, we’re gradually adding more domestic capacity from early next year. We’re the only airline flying widebody aircraft domestically, and we know how much our customers in business class value having a lie-flat seat on longer flights to and from Perth.
“Your credit doesn’t need to cover the cost of the booking for you to receive double points as long as you use the entire value. For example, a family of four flying economy return to London could each receive an additional 18,600 bonus points just from putting a single $50 credit towards the booking. The points you earn can then go towards your next trip.”
In total, $1.2 billion was accumulated during the pandemic on the Qantas brand alone, with $600 million still remaining.
Qantas will also send reminders to customers with COVID credits either directly or through their travel agent about how to access the double points offer.
Last month, Qantas upgraded its half-year profit forecast by an extra $150 million as consumers’ demand for domestic flights rose.
The news means the Flying Kangaroo is now targeting a remarkable underlying profit of up to $1.45 billion.
The result comes despite the wider group recording an underlying loss before tax of $1.86 billion in its last full-year results and claiming the pandemic cost its airlines $7 billion in total.
“The group’s net debt is now expected to fall to an estimated $2.3 billion and $2.5 billion by 31 December 2022,” said the business in a statement.
“This is around $900 million better than expected in the most recent update, due largely to the acceleration of revenue inflows as customers book flights on Qantas, Jetstar and partner airlines into the second half and beyond, as well as deferral of approximately $200 million of capital expenditure to the second half.
“Around 60 per cent of the $2 billion in COVID-related travel credits held by the group have now been redeemed by customers.
“Total credit usage is consistent at a rate of circa $70 million a month and new initiatives will be announced shortly to encourage full use of remaining credits over the next year.”
The airline added that low levels of net debt mean it is in a position to “consider future shareholder returns in February 2023”.
