Tuesday, 1 March 2016

Virgin - Profit up, Frequent Flyer benefits down - or are they?

Velocity Frequent Flyer - A Program of real value



On Monday (Feb 29 2016) Virgin's Velocity Frequent Flyer scheme announced some significant downgrades to the benefits to it's members that will apply from June 1 2016.

Points Expire after 2 years of non-activity
This is no biggy for most regular flyers (hell, I'd qualify by just doing my yearly trip to Byron Bay at Xmas) - but is a bit of fine print that annoys the shit out of customers. It brings it into line with most schemes, where if you don't have any activity, either earning or redeeming, then the points disappear.

To me this seems petty, but I imagine that like gift coupons, a lot of customers have points hanging around that they don't redeem, and so this clears them off the 'balance sheet' every 2 years.

There is also one exclusion to the notion of 'activity'. Family transfer of points doesn't count any more. Oh - and the kicker is, this will be applied retrospectively - so to maintain your points, you will have until the end of June to earn or redeem to retain your points. Seems like a rather unnecessary sting in the tail to me.

I also love how they see 30 days as being adequate notice - when it is exactly this group that probably uses their account less than once a year. Wouldn't 12 months be more appropriate?

Hope their social media team is ready for the online outrage
I hope Velocity and Virgin are bracing themselves for the salvo of 'Outraged of [insert name of suburb]' emails and letters they are going to get as Qantas does when people discover their points have disappeared.  See this flurry of letters to the Sydney Morning Herald's Traveller section about a year ago.

Less points for better travel, and more points for domestic travel
How your points will work for redemptions depends which airline you are travelling on. There are two rates.

Rate One is for Virgin brand, Etihad, Delta and Air New Zealand (Trans-Tasman), and Rate Two is for Singapore, Silk, Air New Zealand (non Trans-Tasman), airberlin, Hawain and South African.

You will need to look at the tables carefully, but basically if you are on Rate One doing domestic economy short runs (from 1 to 2400 miles - which covers pretty much all domestic travel (up to and including Brisbane to Perth = 2244 miles) you will need more miles (example 1 to 600 miles redemption will now need 7,800 points for economy rather than 6,900). Once you hit over 2400 miles, then the redemption rate comes down (example between 9,501 and 15,000 redemption rate drops from 62,000 to 59,800). So in short - domestic economy goes up, and international economy goes down.

For Premium economy and business you are just going to need more all round. How much more just depends on the distance - anywhere from 1,300 to 2,500 more points - or roughly between 11.5% more on shorter routes and about 2% more points on longer routes.

Rate Two is a bit more complex. On the whole this is just a slight rearrangement - with most redemption rates remaining the same or coming down. There are a few exceptions - mainly on shorter distances for premium classes. For example economy between 601 and 1200 miles is going up by roughly 11%, while first class of 8,501 to 9,500 miles is going down by 27%.

What this doesn't tell you
There are two other variables - particularly to do with redemptions, and they are ancillary charges, and availability. Well - According to Traveller.com - Velocity will still outdo Qantas's frequent flyer scheme in terms of points and payments required. Availability may be a different matter.
Under the new Velocity points earning table, a one-way economy class flight from Sydney to Melbourne will require 7800 points and $21.11 in taxes and fees on Virgin versus 8000 points and $33.98 in taxes and fees on Qantas. 
For a one-way business class ticket from Brisbane to Los Angeles, Virgin will require 95,500 points and $137.73 in taxes and fees compared with 96,000 points and $465.33 in taxes and fees on Qantas.
Availability
I had a quick look today for availability in March, and basically the first time you could get out of Sydney to LA in Business with Virgin is March 30th for 94,000 points plus $124.73. Getting back, availability is patchier, but will cost you 94,000 points and $56.98.

On Qantas, the best you can do going out is Premium Economy (on Cathay Pacific) on only a few dates, and for return, its just economy - showing, although when you go in to a date, there is sometimes via Melbourne flghts in first class for the LA Melbourne leg. The points for this are 256,500 round trip (classic rewards), and the costs around $690 - although the booking engine kept telling me that one or more of the classes chosen was unavailable - weird.

2PAXfly Wisdom
This is a downgrade, but not too horrible depending on which partner you are flying with. If you are travelling in premium cabins internationally on some carriers, its actually an improvement. You will still need fewer points, and less cash to redeem with Virgin. Virgin probably wins on the premium seat availability, despite having fewer flights, and definitely wins on the points and fees. Now if Virgin just joined one of the international alliances - the choice would be made.

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