What: Woolworths Limited (ASX: WOW) appears to have rethought its plans to sever its ties with the Qantas Airways Limited (ASX: QAN) frequent flyer program.
According to a media announcement released by the supermarket retailer today, Woolworths Rewards and Qantas Frequent Flyer members will be able to convert Woolworths Dollars into Qantas Points.
This agreement continues an association which has been running for six years and will now continue to run for at least another three.
So What: The continuation of the frequent flyer program arguably gives Woolworths an edge over rival Coles – owned by Wesfarmers Ltd (ASX: WES).
Woolworths' customers now have the option of earning loyalty dollars off their shopping bill which is the enticement also utilised by Coles, or Woolworths' customers can utilise the option of receiving Qantas frequent flyer points.
Now What: While the announcement of this deal will primarily be viewed as a positive for Woolworths, in fact the bigger beneficiary is likely to be Qantas which has built its frequent flyer points platform into an incredibly successful profit generating business unit.
Indeed, Woolworths' share price has failed to respond positively to the announcement today with the stock down 0.6% in mid-afternoon trade. Meanwhile, shares in Qantas have fallen 2.4% but this is more likely a reflection of investors taking profits, betting that the major gains from the lower oil price have already been factored into the airline's stock.