Australia has two currencies. There's the coin of our realm – the Aussie dollar, issued by the Reserve Bank – and frequent flyer points.
Qantas has some 8.6 million frequent flyers on its books and is on track to hit 10 million members by mid-2013, making the airline's points almost a de-facto currency.
So why treat your frequent flyer points any differently to your bank balance?
Mastering your frequent flyer points calls for smart thinking in two areas. First is collecting as many points as you can, especially with the lowest acquisition cost. Then comes spending them in the most effective way.
Frequent flyers call this "earning and burning" and for some it's a challenge, if not an art form.
Here are seven strategies to boost both sides of the earn-and-burn ledger.
1. Don't be fooled by free flights
Independent comparison site WhistleOut calculates it would take 8.4 years, with a spend of $1142 a month, for the average Australian shopper to earn a "free" return economy flight to London.
“Frequent flyer points are the most advertised feature on new credit cards, yet their benefit is very subjective,” says WhistleOut director Cameron Craig.
2. Platinum perks
Put away your wimpy little Woolworths Everyday Rewards card. “Between cards, the difference in points earning potential and cost to you is huge,” Craig explains.
Platinum credit cards typically return the highest number of frequent flyer points per dollar, and often without any limit to the number of points you can earn per month.
Once you've got that card, use it everywhere and on everything. Keep on top of special offers from airline partners which can yield additional points.
In short, mimic Ryan Bingham, the "10 million mile" flyer from Up In The Air who makes sure that every penny he spends turns into airline miles.
3. Don't buy at the frequent flyer store
The online stores where airlines let you redeem points for products delivers perhaps the worst value for your hard-earned miles, and means you're settling on a fixed price rather than taking advantage of discounts available in the real world of retail.
The exception to this rule is vouchers for department stores such as David Jones and Myer. These can be used to buy products on sale or where you can nail down a discount, especially by getting the store to price-match against their competition.
4. Don't buy free flights in economy
The bottom end of the travel market is where you'll see the most aggressive discounting, especially for flights within Australia. But the number of points needed to snare a free seat almost always remains the same.
Using your points when fares are already very cheap translates into a very weak "exchange rate" for your points.
“You can work out the value per point by finding the price you would otherwise pay,” says Lauren McLeod, whose Aussie start-up FlightFox taps the knowledge of frequent flyer experts to crowdsource the best airfare and point redemption deals.
“For example, a budget economy flight on Qantas from Sydney to Melbourne may cost $100 or 8000 points,” says McLeod. Using your points would mean a per-point value of 0.71¢. “And remember, you still pay some fees when redeeming points.”
5. Pick up a business-class ticket
Red-hot deals in business class and even premium economy are less common, however. So redeeming your points for these "premium" classes, especially for overseas travel, delivers perhaps the best value.
“A one-way business flight on Qantas from Sydney to London may cost $10,000 or 128,000 points, so your points would have a per-point value of almost 8¢,” says FlightFox's McLeod. That's more than 10 times the value of a discounted domestic economy flight.
Richard Wheeler, Brisbane-based principal with accountancy firm Moore Stephens, recommends using business-class Any Seat Awards on Qantas flights.
“This is a great way to use points for people who accumulate significant points on credit cards, but don't have any frequent flyer status,” he says.
“This lets you earn status credits and climb the status tree with travel for little cash cost.”
6. Apply for an upgrade
One of the best ways to trade your points for travel is to buy an international economy seat and use your points to apply for an upgrade.
“With Qantas it can be a great deal to use points to upgrade to premium economy, business class or even first class,” says Ben Schlappig, a frequent-flyer guru who runs his own point-maximising consultancy PointsPros.
Just make sure your economy ticket is eligible for an upgrade: many of the cheapest seats don't qualify for a bump-up. The airline or your travel agent can advise accordingly.
“Qantas is also one of the few airlines that lets you 'double upgrade' with miles, going from economy to either premium economy or business class,” Schlappig says.
7. Go around the world
“My favourite use of frequent-flyer points is on round-the-world tickets with one of the airline alliances,” FlightFox's McLeod reveals.
In the case of Qantas, that means the One World group which includes British Airways, Cathay Pacific, Japan Airlines, Air Berlin and American Airlines as partners.
“With the right work, you can craft an amazing five-continent journey for roughly the same number of points required for a return flight to London.”