Virgin Australia revamps Velocity, lowering the bar for rewards ahead of IPO

The airline has given its Velocity frequent flyer program a makeover to give members the chance to earn more rewards for fewer points ahead of its relisting on the ASX.

Virgin Australia is overhauling its Velocity frequent flyer program after customer research found members don’t like the effort required to earn rewards.

Under the new slogan “Velocity means fast” (even though Virgin Australia is the first to admit it actually doesn’t) members will be able to score a domestic economy seat with substantially fewer points.

The minimum points balance needed for a domestic airline economy seat comes down from 7800 points to 6200 plus taxes, fees and carrier charges. Virgin noted the figure was the lowest of any Australian airline loyalty program.

It’s unclear how many seats will be available in the lowest points category or tier one, with two other tiers plus business class requiring more points on the same flight.

Tier three seats for example will “cost” 9900 points on a short flight such as Sydney-Brisbane, and business class 15,500 points.

Longer flights will also require more points within each tier, climbing to 59,500 points for a business class seat on a route in excess of 3601-miles.

The changes coincided with a new “one point” promotion, giving Velocity’s 11.5 million members the chance to pick up goods or an airline seat for a single point.

Virgin Australia has overhauled its Velocity frequent flyer program. Picture: AAP Image/Darren England

Opportunities to do so will be limited to selected time periods announced by Virgin Australia between June 5 and July 2, and apply to an “extremely limited” number of seats and products.

A statement from Virgin Australia said the airline had taken into account cost of living concerns as well as research that found 51 per cent of respondents were deterred by the effort required to earn points in loyalty programs.

Velocity chief executive Nick Rohrlach said innovation was at the heart of everything they did at Virgin Australia, and the program changes were no different.

“We know it’s hard to believe that a member can go on a holiday for just one Velocity point or purchase a Dyson hairdryer for the equivalent of a $2 purchase at Coles, but this is the beauty of our one point rewards initiative,” Mr Rohrlach said.

“It is a huge responsibility and privilege to have the equivalent of one Velocity member in every Australian household, making the program enhancements announced today incredibly impactful for the entire country, particularly for Australians feeling the pinch from the rising cost of living.

“Loyalty works both ways, and we are proud to help Australians get to their next holiday sooner.”

Velocity boss Nick Rohrlach. Picture: Dallas Kilponen

A video promoting the announcement with the slogan “Velocity means fast” was set to hit social media platforms on Monday.

In a side note, Virgin Australia said they knew Velocity did not actually mean fast but the “directional speed of an object in motion as an indication of its rate of change in position as observed from a particular frame of reference and as measured by a particular standard of time”.

“But it’s pretty close,” said the note, “and we’re really serious about being fast.”

The changes come as Virgin Australia’s US owners Bain Capital moved closer to an initial public offering, expected in November.

About 40 per cent of the airline is tipped to sold off to investors in an effort to raise about $1bn.

Bain Capital will retain a majority stake, and other shareholders including Virgin co-founder Richard Branson and the Queensland government will hang onto their smaller slices.