Velocity internal points valuation

[Gold Member]

I booked 2x Flex MEL-ADL-DPS and upgraded the International leg to Business Class for 9,900 points each. Considering that they were asking 8,900 points for the MEL-ADL leg, that’s a steal in itself, but not what I’m here to discuss.

Upon completion of the booking and points upgrade, I noticed that the booking summary included a section titled “Flight Upgrades Confirmed”. Each upgrade has been explicitly priced at $79.20 (See screenshot). I was unable to upgrade the booking myself online, so I had to get an agent to do it for me over the phone. When I brought these values to her attention she seemed puzzled and intimated that perhaps this information wasn’t for the public to see and that she would pursue this matter with her Team Leader.

So, has Velocity inadvertently publicised their internal cost of points? 9,900 points = $79.20. That’s exactly 0.8 cents per point. Interesting to note that the points upgrade cost of $158.40 added to the original total of $1327.24 to create a new Booking Total.

I can’t recall seeing this breakdown before so perhaps a temporary feature (until it’s removed) following last weekend’s system upgrade?

 

[Scarlett]

That is interesting; and more than I would have thought they valued them at internally.

I use 1c just for ease of calculation when working out comparative valuation for myself.

 

[ozstamps]

I am surprised they place that high a figure on them internally.

That must make their on book Velocity liability equal to the GDP of Korea.

The current Amex Shop Small has 10 prizes of a MILLION points and say this about theoretical value - .666c a point full boat max it seems?

PRIZE AND DRAW

11. There will be ten (10) prize winners. The first ten valid entries drawn in the draw will each win one million (1,000,000) Qantas Points, Velocity Points or Membership Rewards points (as applicable, according to the points program the entrant has elected for their Eligible Card used to make the winning Eligible Transaction). For the avoidance of doubt, the winner will not receive one million points in each program and can only receive one million points in respect to one program. The Qantas Points, Velocity Points and Membership Rewards points (together “Points”) will be credited to the Eligible Entrant’s relevant loyalty program account within 28 days of successful verification. Each prize is valued at up to the notional value of AU$6,666.70, with the exact value of the prize being dependent on the winner’s loyalty program and how they elect to redeem the Points. Prize values are based upon the maximum value of Membership Rewards points as at 28 April 2022 (inclusive of GST). Note that, ordinarily, neither Qantas Points, Velocity Points nor Membership Rewards Points have a monetary value, and neither can be redeemed for cash.

Terms And Conditions

Terms And Conditions Terms And Conditions Terms And Conditions

www.americanexpress.com

 

[bam71]

I think I’ve seen a similar thing with a JQ redemption J booking a few years back. There was a $$ value assigned.

 

[N0mad]

i'm pretty sure the figure would be the cost to the airline not the value velocity (a separate entity) values them at. Standard practice in large organisations with different divisions and many subsidiaries, they all re-charge at inflated rates.

 

[Bagpuss]

From an accounting point of view I would assume they must have a value to them.
However, I'd doubt there's much value.

IE on redemption :
Any Seat 1 point = X value
Virgin redemption 1 point = X value
SQ redemption 1 point = X value

On earn
Estore 1 point = X purchase price
Virgin 1 point = X purchase price
7Elevel 1 point = X purchase price
ANZ 1 point = X purchase price

Hence every competition will value differently.

I'd assume quite simply there would be an overall cost assumption which even's it all out.

When using points we compare the cost of using points vs the on sale cost and have our own decision making.
I suspect that as an example a Business Class redemption Velocity pays Virgin Australia something like $250

 

[ozstamps]

I suspect that as an example a Business Class redemption Velocity pays Virgin Australia something like $250

And I suspect the moon is made of green cheese.

Likely 10% or so of that. Ask staff what a Biz ticket costs them in real money! One reason Biz cabins are often well packed with folks with staff tags on overhead bags.

The public can freely BUY Business Class for $299 on some routes. And earn lots of points and SC.

 

[Bagpuss]

And I suspect the moon is made of green cheese.

Likely 10% or so of that. Ask staff what a Biz ticket costs them in real money! One reason Biz cabins are often well packed with folks with staff tags on overhead bags.

The public can freely BUY Business Class for $299 on some routes. And earn lots of points and SC.

Forgot to post a key bit missing From my post.
$250 on a PER <> East Coast fare which tends to be $1,700 upwards.

The baggage is actually the crew‘s bags or staff pax’ing.

 

[ozstamps]

No, the bags with staff tags I saw last week were NOT 'crew bags', but owned for the FOUR staffers all sitting in Biz and chatting to the working staff, and each other, about company goss, or I would not have mentioned it. Was like a FA convention.

Love the $250 Velocity cost per ticket 'explanation'.

 

[MattA]

Resurrecting an old thread here but just received an email about the latest Velocity / Flybuys points millionaire transfer promo and noticed this in the terms:

"First Prize (x1) – 5,000,000 Velocity Points; prize valued at $152,580. Second Prize (x1) – 5,000,000 Flybuys bonus points; prize valued at $25,000. Third Prize (x100) – 10,000 Velocity Points; prize valued at $305.16. Fourth Prize (x100) – $100 Coles Gift Card; prize valued at $100. Fifth Prize (x100) – 2 x Single entry Virgin Australia Lounge passes; prize valued at $55. Sixth Prize (x100) – 10,000 Flybuys bonus points; prize valued at $50."

Clearly inflation is not just a problem for the RBA. The official competition value of a Velocity point is now 3c (up from just 0.66c in November last year). Yikes!

Even funnier, the second prize of 5M Flybuys is worth only $25k. Fair enough, that's the dollar value of using those Flybuys as a cash discount at Coles, but hang on a minute those Flybuys can be directly converted to 2.5M Velocity points, whereupon they suddenly triple in value!

None of this means anything, of course. But it made me chuckle.

 

[MEL_Traveller]

Difference between ‘valued at’ and ‘worth’

My understanding is that in general airlines sell points to banks etc at around 1c each, but they have a redeemable wroth of ~.7c. So a 50% profit for the airline there.

Some exceptions to this which are true classic or base level award seats. But that’s also complicated because in general award seats are usually only seats the airline can’t sell…. so the seat the FF program is buying for however many points is all ‘profit’ the airline wouldn’t have made anyway.