Major changes to Velocity Frequent Flyer announced 17/10/24

[FlyingKangaroo]

The airline that wanted its market position to attract the value customer will now be offering substantially less value in its FF program.

VA will likely remain the “value” choice compared to Qantas when it comes to what matters most: the cost of the airfare. So the question becomes whether those lower fares keep bringing the passengers in despite a lower value FFP.

For most, the answer to that is probably yes, even though it’s almost certain some revenue will be lost. So the next questions are just how much revenue will be lost and is it material, and might they be forced to lower or ultimately keep fares lower over time than they otherwise would have if they maintained a higher value FFP?

VA presumably isn’t stupid and knows those risks yet is comfortable with the decision they’ve made, but only time will tell. The “mid-market” of any industry is a tough place to be, and a fool’s errand in the minds of many.

 

[levelnine]

The “mid-market” of any industry is a tough place to be, and a fool’s errand in the minds of many.

Great analysis. The only point I'd add is that I think the mid-market has become a lot easier to occupy now that Rex is gone. If Rex were still here and had launched a competitive frequent flyer program, I have my doubts that Virgin would have devalued as much as it did.

 

[simmomelb]

Great analysis. The only point I'd add is that I think the mid-market has become a lot easier to occupy now that Rex is gone. If Rex were still here and had launched a competitive frequent flyer program, I have my doubts that Virgin would have devalued as much as it did.

I think you'll find these changes have been planned for months, well before the demise of Rex jet services, but of course, non of us can know for sure to what extent.
All just speculation.

 

[kpc]

VA will likely remain the “value” choice compared to Qantas when it comes to what matters most: the cost of the airfare. So the question becomes whether those lower fares keep bringing the passengers in despite a lower value FFP.

For most, the answer to that is probably yes, even though it’s almost certain some revenue will be lost. So the next questions are just how much revenue will be lost and is it material, and might they be forced to lower or ultimately keep fares lower over time than they otherwise would have if they maintained a higher value FFP?

VA presumably isn’t stupid and knows those risks yet is comfortable with the decision they’ve made, but only time will tell. The “mid-market” of any industry is a tough place to be, and a fool’s errand in the minds of many.

As mention elsewhere, a close member of the family works for Bain. He doesn't share alot as it is confidential information but your analysis marries well with what he implies to my comments about Bain's ownership of Virgin.

BTW, he bluntly told me that I and my freq flyer mob are not Virgin's target customers as we cost the airline money...getting status and (costly) benefits for as little as possible...this would be consistent as to why Virgin are changing their FF program...to reduce costs!

I complained to him that unless flying Va J or are Plat, wifi is not free like Qf. He told me tat wifi is expensive, and to fly Qf!!

 

[moa999]

bluntly told me that I and my freq flyer mob are not Virgin's target customers as we cost the airline money...getting status and (costly) benefits for as little as possible

Yep.. they want mushrooms, not knowledgeable consumers who use their rules against them.

The fact that so many VFFs who "optimise" their status earning aren't happy is probably not seen as a bad thing.

 

[p--and--t]

He told me tat wifi is expensive, and to fly Qf!!

Well there you have your solution, recommended directly from “a close member of the family” who is close to the action.

 

[kpc]

Well there you have your solution, recommended directly from “a close member of the family” who is close to the action

Yeah but he and Virgin know that Va flights are almost aleays quite a bit cheaper than Qf flights,...and most of us can survive 1-2 hours offline (just fot me )

 

[p--and--t]

Yeah but he and Virgin know that Va flights are almost aleays quite a bit cheaper than Qf flights,...and most of us can survive 1-2 hours offline (just fot me )

As long as VA offers the “value” proposition in way of fares people will make their decision on what they really need as opposed to would like - and VA know it

 

[Lynda2475]

Everyone’s circumstances are different.

True

Maintain QF Platinum = $32k spend

This gave me a good chuckle, as that is the cost to maintain WP for approx 5 years for me.

I've not had any work travel since pre covid, but leveraged DSC , Dom J sales, loyalty bonus, gree tier and 1 reward flight (all for travel i was going to do anyway, no pure status runs) and will earn above the required 1200SCs this FF year for $6.3k.

Last year with points club earn on long haul QF award flights it was a couple of hundred cheaper to maintain QF WP.

Anyone spending $32k should easily be P1 and probably doesn't care about status as are obviously loaded.

Whatever the program a little pre planning can make for affordable status.

 

[p--and--t]

Everyone’s circumstances are different.
For me personally though I don’t see a big problem.
I know prices change all the time but I’ve just booked a J flight next month from SYD-MEL on VA for $506 and QF wanted $1061
So on those figures.
Maintain QF Gold = $16k spend
Maintain QF Platinum = $32k spend

Currently with VA
Maintain VA Gold = $4k
Maintain VA Platinum = $8k

Under new model
Maintain VA Gold $5k
Maintain VA Platinum $10k

So I’m not sure how much easier QF is and are those additional benefits worth $10-20k extra in spend?

Methinks extremely small selected sample extrapolated to give an incorrect assumption

 

[jase05]

Methinks extremely small selected sample extrapolated to give an incorrect assumption

Hence why I said at those prices and with my patterns. Obviously you can spend less but in the 30 odd domestic leisure flights I’ve done this year only a couple of QF flights came close to matching the VA ones. I always check when booking just in case and most were close to half price and if I had booked QF flights I’d estimate it would have cost us $25-30k each

 

[p--and--t]

Hence why I said at those prices and with my patterns. Obviously you can spend less but in the 30 odd domestic leisure flights I’ve done this year only a couple of QF flights came close to matching the VA ones. I always check when booking just in case and most were close to half price and if I had booked QF flights I’d estimate it would have cost us $25-30k each

Yep horses for courses.

My last five leisure flights (not needing to travel on a specific day and requiring luggage and not traveling before 8am or after 8pm and not last flight of the day and booking at least two weeks in advance) have all resulted in me flying in a JQ legroom seat or QF as they were the cheapest option.

 

[openseat]

That is, most members who earn lifetime status immediately "spend down" or disconnect from the airline entirely. There is no incentive to continue beyond what they NEED to do (eg: if they NEED to fly SYD-MEL weekly...that continues). Velocity could have easily added Forever Gold benefits, e.g., each year you start with 400SC, and all flights forever have double SC. But they didn't, which makes me think it wasn't thought out as deeply as it could have been or perhaps even rushed.

It would be very interesting to see what proportion of QF LTG members stop flying QF as much as previously. As you say VA have missed something different here.

 

[ben95]

Methinks extremely small selected sample extrapolated to give an incorrect assumption

Agreed. I think with the fundamental changes in the system whether people are better or worse off in the new system is now highly depends on individual circumstances now - a quick example for one particular route for one partiuclar fare isn't quite enough sample to say "it's a big problem" or "it's no big deal".

I think whose better off and whose worse off are quite well discussed already so I won't repeat them here. Though I have to say for me personally, after doing the math, I'll have to concentrate my flying into VA Choice/Flex fare and completely eliminate my JQ or Lite flying to reach the required $8K spend. I currently fly JQ or use a lite fare (once in a while) if VA fare at a particular time is too expensive, I don't think I can do that anymore now it's a spend bases system.

 

[p--and--t]

Agreed. I think with the fundamental changes in the system whether people are better or worse off in the new system is now highly depends on individual circumstances now - a quick example for one particular route for one partiuclar fare isn't quite enough sample to say "it's a big problem" or "it's no big deal".

I think whose better off and whose worse off are quite well discussed already so I won't repeat them here. Though I have to say for me personally, after doing the math, I'll have to concentrate my flying into VA Choice/Flex fare and completely eliminate my JQ or Lite flying.

Yep and also depends on whether you are chasing status or dollar value/ convenience. Big reveal - I don't chase status.

As I've posted many times I’m carrier agnostic and pick flights that opportunistically suit me and what i’m prepared to spend.

Domestically I never pay for a J seat. Not worth it to me. International however is a different story.

 

[p--and--t]

It would be very interesting to see what proportion of QF LTG members stop flying QF as much as previously. As you say VA have missed something different here.

If you read a lot of posts on AFF (which may or may not be a representative sample of the populace) its seems many “claim” to do just that.

 

[RooFlyer]

So I’m not sure how much easier QF is and are those additional benefits worth $10-20k extra in spend?

Your post was about domestic, I think, but travelling international on Oneworld with QFF in booking gives you a RTW/international trip for that spend, and most if not all the earn required for QF plat

 

[JohnK]

I've been recently planning how I can earn Platinum status every 2 years and my wife also earn Platinum status every 2 years.

Scrap that plan.

I have not done all the calculations but we are now likely to struggle for 1 of us to earn Gold. I may be able to earn half the VA SCs but wife won't. So internationally flying SQ we play roulette with 3 of us trying to get into lounge and allowance only allowing 2 of us entry.

At the moment daughter and I do around 6 return trips a year OOL-SYD which is around $3000 in Choice. That was 360 SCs where as soon that will be 250 SCs.

And with award seats increasing this makes it tough to wear. Still need to fly to SYD to see mum and dad but may not be able to earn status that easily.

Oh well hope JQ BNE-BKK is successful. Points earned from Woolworths shopping should allow wife, daughter and me, 2 x return flights each a year. We'll have lounge access in BNE courtesy of Lifetime Gold.

 

[MooTime]

BTW, he bluntly told me that I and my freq flyer mob are not Virgin's target customers as we cost the airline money...getting status and (costly) benefits for as little as possible...this would be consistent as to why Virgin are changing their FF program...to reduce costs!

I complained to him that unless flying Va J or are Plat, wifi is not free like Qf. He told me tat wifi is expensive, and to fly Qf!!

I would say if you hit status by following the airline rules of accuring enough SC, sectors then using benefits that airline provides is a fare deal and for the airline or airline owner in this instance your not the target, well that just seems ordinary business plan.

Change the rules, as they have I guess. Must be careful to not put off too many off those so called "non target customers"
Not sure many 'new' members they going to attract with this devaluation? Oh I can get less status credits now with Virgin, less SC on international partners, where do I sign up? Hmm.

Wasn't long ago they were throwing WP status for a paltry 200SCs to new comers, now basically ditching loyal WP customers who clock up ~1000SCs.
Changing landscape it is.

 

[33kft]

I complained to him that unless flying Va J or are Plat, wifi is not free like Qf. He told me tat wifi is expensive, and to fly Qf!!

I would be surprised if this was the entire reasoning, but I guess there would be some variables at play. The majority of the cost is going to be having internet at all, with the costly fit out and service fees. The additional cost that other pax using internet would incur would be minimal, you would think, but on the other hand having low/no status pax subsidise the cost of offering it free to higher status pax does make business sense, if people are actually buying internet access on the regular.

If not, then it purely becomes the lure to get frequent flyers who are close to earning plat on the hook for their leisure travel.