Virgin chases Qantas frequent flyers

Virgin Australia says it is eating into Qantas' share of the frequent-flyer loyalty market, highlighting growth in its membership base and travellers redeeming their points over the past year.

Australia's second-largest airline is stepping up the focus on its Velocity loyalty program, which will be central to its battle with Qantas for lucrative corporate travellers.

Taking a leaf out of Richard Branson's publicity playbook, Virgin will now allow loyalty members to earn frequent-flyer points when their cats or dogs fly on its planes on domestic routes.

Neil Thompson, chief of Virgin's Velocity program, said the airline had made inroads into Qantas' dominance of the frequent-flyer market, citing the growth in members over the past year.

Virgin's membership base has grown by 500,000 to almost 3.7 million.

While Virgin is closing in on the 4 million-member mark, it remains a distant second to Qantas, whose loyalty scheme has 9.3 million members. Qantas stands to benefit from Emirates' Skywards members switching their allegiance in the wake of the airlines' alliance.

Mr Thompson emphasised that member activity - earning and redeeming of points - was more important to airlines than membership tallies.

"We have seen significant growth in the volume of flights people are redeeming," he said.

He declined to put a figure on the increase in Velocity members redeeming points.

Qantas' most recent figures showed a rise of almost 8 per cent in redemption rates for its loyalty scheme in March, compared with the same month in 2012.

Analysts said many of the extra Velocity members were likely to be Qantas Frequent Flyer holders but it remained unclear whether it meant they were flying less with Australia's largest airline.

"The fact that they are growing the membership base doesn't necessarily mean they are hurting Qantas," Commonwealth Bank analyst Matt Crowe said.

Investors are more focused on whether the greater Velocity membership base is helping the airline to boost the number of business people flying on its planes. A key part of Virgin's long-term strategy has been to gain a bigger share of the corporate travel market.