How will Velocity respond to Qantas FF changes (new Classic Plus rewards)

[Doctore1003]

Virgin stakeholders (and potential buyers) will no doubt expect the airline to respond to Qantas FF changes.

Virgin could rule out doing anything in the short term, but that may not be viable if Qantas indeed just gained a competitive edge.

I think Virgin has to do *something* before an IPO or sale to boost its loyalty division.

Anyone want to speculate how or say what’s on their wishlist??

 

[serfty]

Anyone want to speculate how or say what’s on their wishlist??

Domestic earn is already mainly based on spend; I really can't see Velocity changing things in the short term.

Possible a year down the track when they have analysed the results of what QFF are doing.

 

[Doctore1003]

I think Virgin has obvious questions to answer to potential investors about how it plans to grow its loyalty division and compete with Qantas FF.

These questions are probably being asked in private right now.

 

[Human]

At the very least, Virgin needs to clean up its search engine a bit as far as reward flights go. The current search feature is clunky and I'd like to see some sort of search where, like Qantas, you can (more) easily isolate which flights have reward seats, and you can also isolate which flights have reward seats in different cabin classes.

This wouldn't even involve changing the nature of rewards or the number of points needed: it's simply cleaning up the search feature to make it less frustrating and time-consuming, and more user-friendly.

Down the track, I wonder if they could negotiate with their major partners such as Qatar, Singapore and United to make their more expensive reward options (eg. the Singapore "Advantage" awards and the Qatar "Flex" awards) available to Velocity customers, obviously with the commensurate increase in points required. This would be similar, but not identical, to Qantas' new Classic Plus awards.

Finally, I wonder how hard it would be to extend the search calendar from the current 330 days to 355-360 days, meaning that reward flights were available to Velocity members at the same time as they are available to Qatar Privilege Club, KrisFlyer etc members. That would give Velocity members a huge boost in terms of reward seat availability, without increasing the cost of reward seats.

 

[clifford]

One sincerely hopes that VA doesn't respond. Otherwise it's a race to the bottom (edit. Of course VA will).

I guess it's the nature of airlines and frequent flyer schemes these days.

In a couple of years, when my Plat memberships run out with QF and VA, I may well just retire from flying, and do burnouts with my V8 at the local traffic lights....

 

[andye]

One sincerely hopes that VA doesn't respond. Otherwise it's a race to the bottom (edit. Of course VA will).

I guess it's the nature of airlines and frequent flyer schemes these days.

In a couple of years, when my Plat memberships run out with QF and VA, I may well just retire from flying, and do burnouts with my V8 at the local traffic lights....

Always assuming V8s aren't banned from the roads

 

[Must...Fly!]

Maybe it's Qantas responding to VA?

The three-tier pricing changes to Velocity rewards would've been noted by the opposition.

 

[levelnine]

The difference is VA has no medium- or long-haul metal. So if they do have a problem with award availability to Asia/Europe/US/etc, they can't do anything about it. They're reliant on partners. And they've already devalued their domestic flights with the three-tier pricing.

 

[Doctore1003]

The difference is VA has no medium- or long-haul metal. So if they do have a problem with award availability to Asia/Europe/US/etc, they can't do anything about it. They're reliant on partners. And they've already devalued their domestic flights with the three-tier pricing.

True, so the one of their obvious goals could be: work with partners to make long haul reward seats more available.

 

[odysseus]

True, so the one of their obvious goals could be: work with partners to make long haul reward seats more available.

That would most likely incur extra cost. And I can't see that they'll value the benefits as worth the cost... evidently since they haven't even been able to justify the (relative) marginal cost of international lounges for business class international flights yet.

 

[jeppetto367]

\

I think Virgin has to do *something* before an IPO or sale to boost its loyalty division.

What I'd like them to do before an IPO is introduce lifetime Gold and Silver status. It's not something they'll have to deal with after the sale, and they could do a one off introduction Double Status Credit promotion at the same time, bring in some immediate revenue to boost the books.

 

[Tannin]

A: Laugh. "We don't have a problem with too many of our members having excess points accumulated over decades, forcing us to create 'new' programs to try and induce them to spend more for the same seat ... Oh, and we don't rip you off on fees when booking reward seats"

 

[Must...Fly!]

Oh, and we don't rip you off on fees when booking reward seats"

As much as I believe VFF to be superior I'm not sure that's quite true...

 

[HS-TQE]

That would most likely incur extra cost. And I can't see that they'll value the benefits as worth the cost... evidently since they haven't even been able to justify the (relative) marginal cost of international lounges for business class international flights yet.

On a related note, VA 1.0's old/former JVs (NZ, EY, DL and briefly HX) also cost a fair bit of money as operating costs are split 50/50 between partners, even if a carrier isn't operating any metal at all in the JV (i.e the QF/EK JV). The old JVs (usually) had more reward seat availability then the secondary partners.

Saying all of that, Can't see Private Equity spending money on JVs anytime soon considering the OpEx costs under the 50/50 arrangement. Any future 'JVs' if at all, is likely to be passed off to whoever the 20% cornerstone investor may be, if Bain are somewhat able to get one.

 

[levelnine]

True, so the one of their obvious goals could be: work with partners to make long haul reward seats more available.

VA would have to pay a huge amount more for access to extra seats. A good example is Alaska Airlines. They have access to increased inventory on some partner airlines, but the price is over double the points cost, making them not worth it.

 

[Mattg]

From an AFR article yesterday:

The introduction of a new redemption category, Classic Plus, came after backlash from angry customers unable to spend the points they have accumulated.

But Mr Rohrlach said Velocity had no plans to introduce another redemption tier, given its members could still redeem seats on 80 per cent of future Virgin flights.

“There’s still a seat to London every day in July with one of our partners. It might be a different partner every day but because we’ve got all these different airlines, there’s a variety of routes,” he said.

This airline has a rewards seat to Europe every day in July

Qantas has a frequent flyer program competitor nagging at its heels, with Aussies signing up to Virgin Australia’s Velocity in droves.

www.afr.com

 

[CorporateFlyerMEL]

VA FF Boss quoted in the AFR today:

“There’s still a seat to London every day in July with one of our partners. It might be a different partner every day but because we’ve got all these different airlines, there’s a variety of routes,” he said.

 

[p--and--t]

From an AFR article yesterday:

This airline has a rewards seat to Europe every day in July

Qantas has a frequent flyer program competitor nagging at its heels, with Aussies signing up to Virgin Australia’s Velocity in droves.

www.afr.com

Paywalled

 

[bam71]

Here it is <redacted due to copyright>

---

Main points:

Velocity now counts nearly every second Australian as a member as the value-focused airline sets its sights on loyalty as a bigger revenue driver.

Velocity chief executive Nick Rohrlach said the program had reached 12 million members after a year in which it signed up a million new members – including many disgruntled Qantas customers.

But Mr Rohrlach said Velocity had no plans to introduce another redemption tier, given its members could still redeem seats on 80 per cent of future Virgin flights.

“There’s still a seat to London every day in July with one of our partners. It might be a different partner every day but because we’ve got all these different airlines, there’s a variety of routes,” he said.

Mr Rohrlach hit back at suggestions that points have been devalued, saying the lowest redemption rates have actually fallen since COVID-19.

Velocity reported $330 million revenue and profit of $77 million – a 70 per cent increase in revenue and 30 per cent increase in profit – in the 2023 financial year.

Virgin said its net profit after tax was $129 million, from revenue of $5 billion in the year to June 30, up 124 per cent. It was Virgin’s first profit in 11 years.

While Qantas has had to find new ways to help members spend points flying, Mr Rohrlach said Velocity was still gathering new partners. Airlines get revenue by charging partners for points that they then give to customers as loyalty rewards.

Mr Rohrlach said the airline’s small business program, Virgin Australia Business Flyer, had tripled its membership since COVID-19 in line with the new-look Virgin Australia’s focus on the small and medium-sized enterprises market.