New data released by Velocity Frequent Flyer (VFF) indicates Australians redeemed roughly $3.5 billion in loyalty-points value over the past 12 months. That reflects a substantial shift as cost-of-living pressures push consumers to convert previously “nice-to-have” points into practical savings.
Survey findings show 49 per cent of Australians plan to use frequent-flyer points this Christmas for shopping, travel or everyday expenses. Younger demographics stand out: 79 per cent of Gen Z intend to redeem points for retail purchases and 83 per cent plan to use them for travel.
That intention builds upon reserves already held across the market. VFF reports the average member carries around 58,000 unredeemed points. Extrapolated nationally, this represents roughly 783 billion unspent points, equating to about $1.9 billion in latent value.
Redemption behaviour over the past year suggests that members who did act secured around $400 each, on average, a non-trivial contribution to household budgets during a tightening economic cycle.
“Members are no longer just thinking about flights – a 40% surge in members earning through non-air partners shows Aussies are turning everyday spending into Christmas gifts,” Velocity Frequent Flyer CEO Nick Rohrlach said.
“With cost-of-living pressures impacting households, points are becoming an important part of how Australians manage their spending, especially in the lead up to Christmas. Checking your balance, reviewing unredeemed rewards and planning ahead can make a real difference.”
Are loyalty programs shifting from travel perks to budgeting tools?
Evidence across retail and financial behaviour indicates loyalty programs are widening beyond pure aviation outcomes. Everyday retail redemption through non‑air partners has accelerated. VFF has expanded in‑store use of points through Myer, while cross‑sector alliances with grocery, convenience, rideshare and delivery networks offer multiple earn‑and‑burn paths. These channels increase redemption velocity, retire unredeemed liability and broaden VFF acquisition targets beyond frequent travellers.
A McKinsey consumer loyalty study found Australians engage more consistently with points on everyday purchases when incentives connect to cost offsets rather than discretionary travel. Data compiled by national competition regulators has also identified growing scrutiny over value per point for flight redemption amid tight reward‑seat inventory.
In parallel, airlines are reshaping loyalty economics. Shifts in earn rates and redemption requirements across domestic and partner networks indicate points are becoming more strategically deployed as commercial assets. The retail redemption pathways present an alternative value outcome for members who face constrained reward‑seat availability or whose travel patterns have slowed.
Younger demographics in particular appear to treat points as working capital. According to the VFF survey, 79 per cent of Gen Z members intend to redeem for retail, while 83 per cent expect to apply points to travel. The data suggests higher digital comfort and greater awareness of loyalty platforms among younger cohorts, reinforced by cost‑of‑living conditions that have driven uptake of alternative savings tools.
What this signals for airline balance sheets
Unredeemed points represent liability on airline balance sheets. Increased redemption rates lower that exposure and cycle points into the ecosystem through partner channels. For airlines, diversified redemption builds transactional depth, sharpens engagement metrics and provides more granular demand signals. Retail redemptions also offer airlines options to preserve yields on peak or high‑demand sectors, especially as international capacity rebuilds.
Agents and wholesalers may see shifts in enquiry behaviour as more members tap retail redemption and potentially defer flight bookings. If households channel points into everyday spend rather than travel, operators could experience softer redemption‑linked booking interest at seasonal peaks. Commercial teams may also face questions around comparative value between flight redemptions and retail applications when counselling clients holding large balances.
Market context and competitive positioning
Loyalty remains a core competitive lever across domestic aviation. Velocity’s expansion of non‑air partnerships follows comparable moves by Qantas Frequent Flyer, which has widened retail access through fuel, grocery, banking and category‑based incentives. Competition across these programs has intensified on earn‑rate breadth, redemption flexibility and partner reach. The underlying goal remains the same: lift engagement, raise participation frequency and convert idle points.
Economic signals support the shift. Wage growth has lagged inflation and household purchasing power remains constrained. Loyalty balances are becoming a substitute value pool during seasonal spending periods, enabling purchases that might otherwise be delayed. Airlines, meanwhile, secure improved analytics on redemption triggers, customer segmentation and spending pathways.
Why the Christmas period matters for loyalty economics
The final quarter represents peak consumer spend, with gifting and travel planning accelerating. Points conversion during this period gives airlines clearer read‑outs on demand elasticity and program competitiveness. If retail redemption volumes continue to rise, loyalty teams may refine earn tiers, tighten reward‑seat release logic or expand merchandise partnerships to balance redemption load.
For travel advisors, the trend raises advisory value. Understanding redemption structures, retail conversion rates, seat availability patterns and earn‑rate changes creates opportunity to guide clients on optimal value. In a peak booking cycle, these dynamics will matter for itinerary planning, yield forecasting and overall conversion.
KARRYON UNPACKS: Loyalty balances are shifting into everyday purchasing capital, creating new considerations for travel planners as redemption behaviour diverges from traditional flight usage.
