Upgrade to the Velocity Program

[scibo10]

John Borghetti has clearly targeted the upgrading of the Velocity Program as one of his priorities. Interested to hear what people would be looking for here. I have 3 major issues with the current program myself

1. The level of points earn for different classes within economy. For example, SYD to LAX are usually around the same price in discount economy between QF and VA, yet the points earn is 1 point per mile with QF vs 0.25 points per mile with VA. Given the number of points required to redeem SYD-LAX is 96,000 for QF and 94,000 for VA, it is a no brainer which program is currently superior here. For this reason, on US trip last year, I went QF, even though I did want to try out VA.

2. Only 3 levels of status vs 4 for QF make it very hard to even earn Silver with Velocity's Program. Now for those that are status with Velocity, this is a plus, however making it unreachable for the masses means that many people would not place value in the Velocity program as much as QFF.

3. Time and process for posting. This has been talked about many times over, so won't do it here.

Should Virgin not wish to go down a global alliance path, it would be good if a "Virgin" alliance could be created with DJ, VA, VS, and VX.

 

[brett-au]

On flying from OOL-SYD the other day on a blue saver ticket, my meeting ended early so I headed to the airport well before my flight was due to depart. Even with my silver status, I was disappointed that I could not be moved onto an earlier flight, which still had seats free (as I was told I could pay for the option).

I would like velocity to be a little more flexible for people with status. (yes I know I could have bought a flexible ticket, but I'm only talking about changes made on the day for earlier flights).

I wouldn't mind seeing a life time silver status either. Something along the lines of, if you've been silver or higher for 5 years continuously, then have silver for life (yes I know velocity hasn't been running status that long).

 

[pauly7]

I don't disagree with your points but I think they really need to just fix the very very basics. Including as you point out the earning and burning. T

They need to TOP qf to have any hope of dragging people away! Not come in equal or slightly under...Status match would be good way to help perhaps QF plat - DJ gold. I'm suprised they haven't done this already.

I personally and a few others who have joined just gave up on Velocity primarily for the time it took to post. And the lack of points posting at all. And the non interest of Velocity in chasing up. Too much hassle.

I don't mind DJ, I desperately want them to try harder and show real action in fixing themselves up as a real contender!

 

[777]

To be honest, i'm not sure what the time to post problem is with flights being credited. I have never waited more than a week to have a DJ or VA flight credited. It took me 5 months to get a Jetstar starclass flight credited to QF and several Jetstar full fare flights have never credited at all despite repeatedly contacting them.

There is an obvious issue with international partner airlines and shop and earn partners - which may be what people are referring to - but even that i've found better than my QF/JQ experiences. I've never had the slightest problem with DJ/ VA itself though.

777.

 

[sampson]

I agree with all of your points.

I didn't get the invite only invitation to a complimentary upgrade to Silver status despite several years now of buying about 18 flights to Los Angeles economy. It's no big deal but I have plenty of Qantas frequent Flyer points as well as complimentary upgrades are treating sick passengers on their flights. Qantas now has these nice superduper airplanes and they don't seem to have a massive check in queues that virgin has.

So far as I'm concerned, is no reason for we lowly bread-and-butter red passengers to be loyal to Virgin.

Also I hold similar views on the future expressed by George Soros and Warren Buffett. I want to park my points somewhere I can use them long into the future, and I personally feel that Qantas will be around for a long time.

I'll probably transfer some amex points to the Virgin group [my Citibank plat card points are siphoned off that Qantas every month] IF an offer of an upgrade to Silver status is still on the table. Is it?

 

[notzac]

The level of points earn for different classes within economy. For example, SYD to LAX are usually around the same price in discount economy between QF and VA, yet the points earn is 1 point per mile with QF vs 0.25 points per mile with VA.

Amen to that! It's a tough sell knowing that I'll get 100% points/mile + 100% WP bonus if I fly QF vs. 25% points/mile + 60% DJ Gold bonus .. admittedly it's a better deal with VA when flying J, but I can't personally afford that.

Actually, I'd really like to see the method of points/status earning standardised across the board. Off the top of my head..

• All flying, irrespective of carrier, earns based on miles flown (rather than dollars spent)
• Flying on DJ, VA, VS, VX is subject to a reasonable minimum mileage per flight (say 1000/sector?)
• Mileage earnt is subject to COS purchased -- 1:1 for discount Y, 1.25:1 for full Y/ discount Y+, 1.5:1 for full Y+, 2:1 for J/F
• Mileage earnt while flying DJ, VA, VS and VX earns "status miles" (would love to see more airlines earn status, but realistically unlikely)
• Mileage earnt while flying DJ, VA, VS and VX also earns "bonus miles" - DJ Silver gets an additional 50%, DJ Gold gets an additional 100%. Doesn't count towards status.
• DJ Silver is attained at 35k status miles and retained at 30k status miles.
• DJ Gold is attained at 70k status miles and retained at 60k status miles.

All complete guesswork but based off how many other FF programs work. To me, it seems simpler to predict mileage earnt (with the added bonus that mileage runs would be possible )

On flying from OOL-SYD the other day on a blue saver ticket, my meeting ended early so I headed to the airport well before my flight was due to depart. Even with my silver status, I was disappointed that I could not be moved onto an earlier flight, which still had seats free (as I was told I could pay for the option)

See, to me it makes perfect sense that you couldn't move to an earlier flight - if you want flexibility, pay for a flexible ticket. Most airlines around the world are like this.

 

[Travel Guru]

(yes I know I could have bought a flexible ticket, but I'm only talking about changes made on the day for earlier flights).

Sorry but why do you think 99% of people buy flexi tickets? Its so they can change it on the day if required, it isnt to make changes at other time, (if it was, they'd be better of hedging their bets and paying the change fee on a blue saver fare if they do change).

I agree with the previous poster, if you want to be able to change it, but a flexi ticket, makes perfect sense to me.

TG

 

[dk4]

See, to me it makes perfect sense that you couldn't move to an earlier flight - if you want flexibility, pay for a flexible ticket. Most airlines around the world are like this.

Doesn't make perfect sense to me & not all airlines are like that.

To give just one example, and from the oneworld alliance, AA will allow their elites to "standby" for an earlier flight - if they hold a confirmed seat for a same day departure on any cheapo ticket. IT'S THAT SIMPLE!

The Qantas way (i.e. turning Virgin Blue into QANTASlite) will IMO fail, they won't get enough defectors. You must attack Qantas by using a different business model, and AA provides an great springboard model. (Plus some of the QFF targets they are after, may have an idea about how AA functions, so the learning curve for converting customers wouldn't be too steep.)

* less on the lounges (i.e. everyone pays to access, pays for food & plonk, lounges only at major ports etc)
* more on the flight-time goodies (i.e. free standbys, free upgrades, good value earn/burns)

The alternative models are out there! USE THEM TO WIN, NEW BLUE.

 

[dajop]

Doesn't make perfect sense to me & not all airlines are like that.

To give just one example, and from the oneworld alliance, AA will allow their elites to "standby" for an earlier flight - if they hold a confirmed seat for a same day departure on any cheapo ticket. IT'S THAT SIMPLE!

The Qantas way (i.e. turning Virgin Blue into QANTASlite) will IMO fail, they won't get enough defectors. You must attack Qantas by using a different business model, and AA provides an great springboard model. (Plus some of the QFF targets they are after, may have an idea about how AA functions, so the learning curve for converting customers wouldn't be too steep.)

* less on the lounges (i.e. everyone pays to access, pays for food & plonk, lounges only at major ports etc)
* more on the flight-time goodies (i.e. free standbys, free upgrades, good value earn/burns)

The alternative models are out there! USE THEM TO WIN, NEW BLUE.

Trouble is with your theory, is DJ & JB know full well that if they do this QF will almost certainly respond, net result is you start giving way a lot of value and up with no extra market share. It just seems suicide to start making it more attractive for your most profitable customers to spend less money with you.

It's also hard to accept when people start holding up US examples as the model for use elsewhere as most carriers haven't exactly been highly profitable for some time (SW excepted). I actually wouldn't be surprised with NW disappearing into DL and CO soon to disappear into UA, some of the generosity towards elites in the US starts getting wound back.

 

[dk4]

Trouble is with your theory, is DJ & JB know full well that if they do this QF will almost certainly respond, net result is you start giving way a lot of value and up with no extra market share. It just seems suicide to start making it more attractive for your most profitable customers to spend less money with you.

I disagree, i would posit that the situation in Australia means that Qantas has everything to lose/nothing to gain (from this approach) and Virgin Blue has everything to gain/nothing to lose.

Obviously brighter minds than mine run the massive airline companies in the USA, and I don't have access to their data, but surely even today the DJ model is closer to the AA model, than it is to QF’s. From our sensibilities- domestically AA is perhaps what we might consider a LCC with a "premium cabin".




I would posit that under this model DJ would be able to raise revenue, not lose it. And by NOT taking Qantas head on with premium ground services (where they simply can not make a dent, without massive added investment/costs), they can concentrate on creating a competitive advantage by rewarding loyalty in an area which Qantas simply can NOT afford to match –

• Free upgrades (to the existing PE seating capital)
• Free same day standby
• Free choice of F&B from the menu
• Focus on rewarding economy level customers with good earn/burn

Upgrades/Standbys are still a lottery, and never guaranteed: Just look at the monitor displays at any AA gate (or the chatter in FT forums), showing the hierarchy of names playing the upgrade/standby game. Only those who spend big, get the rewards, so the impetus is to spend big if you desire them.

Ancillary tacks would bring in the yield margins, something QF is loath to do with JQ around (and can't do in terms of making CL, WP & SG pay for lounge access and services). In terms of single brand marketing, I think that it enables effective segmentation between your frequent travellers, BFOD and low lead in price advance purchasers.

But then, only my opinion and i dont have access to the modeling.

 

[notzac]

Gotta say that I'm not keen on the idea of complimentary upgrades for elites. Why? You end up with no-one paying for it, which leads to rubbish quality product.

If the current Y+ product was staying, it would possibly make more sense.

 

[oz_mark]

2. Only 3 levels of status vs 4 for QF make it very hard to even earn Silver with Velocity's Program. Now for those that are status with Velocity, this is a plus, however making it unreachable for the masses means that many people would not place value in the Velocity program as much as QFF.

3 levels of status is not uncommon in the FF world, and if anything is missing, I would have thought that it was the level between silver and gold (or what is called Gold in the QFF program). If they want to do some alignment with partners, and offer recipricol benefits, it would be useful to have a structurally similar elite level system.

 

[777]

Just a note about the new IT system: It appears to be a lot better for status passengers getting good seats. I've flown three times this week and not been further back than row 4. Under the old system online check-in would never give me the good seats - i used to avoid online check in because it didn't seem to recognise status and the options were usually better going for manual allocation at the airport.

Nice.

 

[medhead]

I wouldn't mind seeing a life time silver status either. Something along the lines of, if you've been silver or higher for 5 years continuously, then have silver for life (yes I know velocity hasn't been running status that long).

5 years is a bit unrealistic when compared to the domestic competition. It takes between 10.01 and 23.2 years at silver to make lifetime silver on qantas, and the same time at gold to make lifetime gold. I'd also question the value of giving the same reward to some who just makes silver for 5 years as the reward that you give to someone who greatly exceeds gold for those 5 years. much better to have some sort of lifetime accumulation process.

 

[AnonymousCoward]

I disagree, i would posit that the situation in Australia means that Qantas has everything to lose/nothing to gain (from this approach) and Virgin Blue has everything to gain/nothing to lose.

?!?

You might want to read up on oligopolistic competition. Anything that DJ does, QF will counter. And both airlines will end up worse off, which results in cutbacks to the product.

I would posit that under this model DJ would be able to raise revenue, not lose it. And by NOT taking Qantas head on with premium ground services (where they simply can not make a dent, without massive added investment/costs), they can concentrate on creating a competitive advantage by rewarding loyalty in an area which Qantas simply can NOT afford to match –

• Free upgrades (to the existing PE seating capital)
• Free same day standby
• Free choice of F&B from the menu
• Focus on rewarding economy level customers with good earn/burn

How does any of this raise DJ's profits?
- You're giving away the PE cabin.
- You're giving away flexible ticket revenue.
- You've giving away F&B revenue.
- You're giving away even more flights to people who aren't paying a lot of money for their flights.

Sorry - doesn't make sense to me.

 

[albatross710]

DJ needs to implement activity that is:

a) important and valuable to their target customers
b) able to be delivered at a lower price AND
c) not easily copied by Qantas.

Problem is recently they have been trying to copy the QF model limiting their ability to differentiate.

If a flexi ticket cost +$100 when purchased in advance, then offer flexibility to the elites at that same cost. Hopefully new IT system can support that while hopefully current QF would have significant cost to do same. People are prepared to pay for flexibility.

Scheduling, what are the additional flexibilities that the smaller leaner DJ can take to it's schedules to better hone for customers' needs.

Leverage the only worldwide common branded airline. While each of the 'Virgin' group has their own distinct ownership they share a common theme ownership. The crediting of my Virgin mobile points to my Velocity account needs exploitation. How to drive the consumers from Virgin Mobile, via Virgin Money to Virgin Blue while accruing their points to an upgrade to Fiji on PacificBlue after attending the corporate retreat weekend in the Virgin Island flying Virgin Atlantic. Plenty of internal privacy etc issues n there but also plenty of leverage across the globe that simply cannot be copied by any airline or alliance.

The board has already set their expectations by appointing an ex-QF manager. Bring in what you know how to do and do it for VBA.

Alby

 

[ANstar]

Doesn't make perfect sense to me & not all airlines are like that.

To give just one example, and from the oneworld alliance, AA will allow their elites to "standby" for an earlier flight - if they hold a confirmed seat for a same day departure on any cheapo ticket. IT'S THAT SIMPLE!.

But US airlines are now starting to tighten up on that. I mean why pay $499 for a flexible fare at peak times when I can buy a $39 fare and move for free?

If you want flexibility - pay for it.

I think comp upgrades would be good for status holder - perhaps similar to what NZ and LH offer. NZ offer it on both tiers - LH only when getting the higher tier.

IE at Silver you get 1 upgrade credit. This can be used for domestic flights.(one way).

At Gold you get 2 upgrade credits. These can be used for 2 x domestic upgrades or 1 x International upgrade. (one way)

- Ability to upgrade with points - either at a kiosk or online.

 

[dk4]

How does any of this raise DJ's profits?
- You're giving away the PE cabin.
- You're giving away flexible ticket revenue.
- You've giving away F&B revenue.

Wrong. You are using loyalty as an additional consumer "currency", certainly not "giving anything away": you then use "loyalty" to increase revenue.

You're giving away even more flights to people who aren't paying a lot of money for their flights.

Again - no. You use this position to extract a premium price point over your competitors, as well as extract additional revenue. (Qantas simply extracts a premium price point by using different mix of loyalty tactics & product features, which DJ can't hope to match, let alone exceed.)

The Qantas Business Model is only one of many ways to run an airline.

 

[dk4]

But US airlines are now starting to tighten up on that. I mean why pay $499 for a flexible fare at peak times when I can buy a $39 fare and move for free?

If you want flexibility - pay for it.

Flexibility is never guaranteed, even on a "flexible fare". What it should give you is top billing in the lottery list.

So, I don't disagree with you... but using "loyalty" as a currency should not be overlooked simply because it is not cold hard cash in hand, at that exact point in time.

Plus, even on a flexible ticket, you may not have flexibility - try booking a MEL - SYD Friday 7pm QF "flexible ticket" and turning up at Tulla around 4, and see just how "flexible" it is!

 

[Gremlin]

I think DJ need to be clearer on what is the carrot and what is the stick with their FF program.

With QF, it's actually relatively clear. You travel a few times for business internationally with QF and OW and several times domestically and you can have elite status. In comparison, it's a much tougher slog (not impossible by any stretch) to achieve WP by ponying up and down the eastern seaboard. The stick becomes, by getting the international travel to drive highest level status QF also get the domestic travel to ensure full utilisation of the benefits of status (I'm sure that's not the case for every member, but a sizeable segment nevertheless).

With DJ, not so clear. Other than LAX, no international business destinations of note. Limited (in most cases no) opportunity for status from other destinations.

Therefore, it's stereotypical elite status member is NOT the regular international traveller. They are regular BNE-SYD-MEL commuters or trans-con flyers (but hard product ensures DJ a tougher sell for trans-cons). Having not done the maths, I suspect that elite status is easier to come by doing the eastern seaboard commute on DJ than QF so they're probably getting this right. But are they positioning themselves to fully capitalise on this group of customers? It's not clear to me what the carrot is for these customers, nor what the stick is that encourages them to pay a premium price.