Virgin Australia’s changes to Velocity status credits ask too much of members, say experts

Has Virgin Australia’s Velocity program shot itself in the proverbial foot with major changes to the way members earn status credits? Experts have their say.

Changes to Virgin Australia’s Velocity program making it harder to attain elite status tiers may have backfired on the airline as frequent flyer experts say it’s no longer worth the effort.

Introduced in April, the changes mean Velocity members earn status credits from total dollars spent rather than routes and cabin class, while flights with partner airlines deliver fewer credits.

Some experts argue the move was necessary given the “ease” at which gold status could be obtained at Virgin Australia, it was still considered bold as Qantas’ frequent flyer status was calculated on route and cabin.

Australian Frequent Flyer website editor Matt Graham said that from the outset it was plain the changes were not popular – because of the extra cost.

“Under the new program, the amount of money you would need to spend to achieve or maintain Velocity status is way, way higher than before,” Mr Graham said.

“In some cases, people would need to spend around four times as much to maintain the same status tier level that they currently have.”

As a result, reaching gold status with the Velocity program – led by chief executive Nick Rohrlach – now cost as much or even more than the same tier with Qantas Frequent Flyer, Mr Graham said.

“Many frequent flyers feel that the benefits of the Virgin Australia status do not justify the high qualification requirements,” he said.

“This is particularly the case because Virgin Australia has a much smaller international network than Qantas; has fewer airline partners and since Virgin Australia is not part of a global airline alliance the benefits that frequent flyers get when flying partner airlines are much less consistent.”

The Virgin Australia Lounge at Adelaide Airport is one of seven operated by the airline throughout the country.

Point Hacks spokesman Daniel Sciberras said that with all loyalty program changes there were “winners and losers” but in Velocity’s case there seemed to be more losers than winners.

“There is some benefit for people who are buying those high-priced (flex) tickets and flying regularly,” Mr Sciberras said.

“But people who are looking for value and buying the choice fares will find it harder to earn the status compared to what it was in the previous regime.”

He said if the motive were to get people to spend more on their fare, it may not have the desired outcome unless members could see the “rewards” were worth it.

In that sense Virgin Australia was at a disadvantage due to its much smaller lounge network and complex arrangements with partner airlines.

“For example, with Air Canada (Velocity Gold) members are going to get lounge access and nothing else but then with other partners you may get the priority boarding, priority check-in, extra points and the lounge access,” Mr Sciberras said.

“Then if you get on a Virgin Australia plane itself (for an international flight) you get no lounge access, but if you book it on the partner airline code you do – it’s very complex.”

Steve Hui of iflyflat.com agreed simplicity was the key with loyalty programs if airlines wanted members to remain engaged.

“We’re in an age where no one reads the instruction manual. They just get the device out of the box and start using it,” Mr Hui said.

“That’s the mistake they made. People just want to fly, they don’t have time to do these calculations. Not everyone’s an accountant.”

Velocity is still one of Australia’s most popular loyalty programs with more than 12 million members who can secure a domestic reward seat for as little as 5900 points.

The deeper partnership with Qatar Airways had created new opportunities for members to earn and redeem points on many routes; Singapore Airlines, United and ANA are among Velocity’s other airline partners.

At this stage Qantas appeared to be sticking with what works in terms of status credits, although there were other changes afoot to the frequent flyer program as soon as next month.

As flagged in January, Qantas was increasing the number of points needed for flights by as much as 20 per cent.

The cash component for redemptions will also rise in a move Qantas has said was necessary to sustain and grow the frequent flyer program.