Virgin chases Qantas frequent flyers
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.
Frequently Asked Questions about this Article…
Velocity is Virgin Australia's frequent‑flyer loyalty program. According to the article, Velocity's membership grew by about 500,000 over the past year to almost 3.7 million members, as Virgin steps up its focus on the program to compete with Qantas.
Virgin says it is 'eating into' Qantas' share of the frequent‑flyer market and has made inroads, but it remains a distant second: Velocity is near 3.7 million members versus Qantas' 9.3 million. Analysts note that membership growth alone doesn't necessarily prove Virgin is hurting Qantas' flying volumes.
Virgin's Velocity chief, Neil Thompson, emphasized that member activity—earning and redeeming points—is more important to airlines than raw membership numbers. He said Virgin has seen significant growth in the volume of flights people are redeeming, though he did not give a specific figure.
Yes. The article says Virgin will allow loyalty members to earn frequent‑flyer points when their cats or dogs fly on its domestic routes, part of a higher profile push for the Velocity program.
Qantas reported an almost 8% rise in redemption rates for its loyalty scheme in March compared with the same month in 2012. Virgin says it has seen significant growth in redeemed flights for Velocity members but has not published a specific redemption increase.
The article notes Qantas could benefit from Emirates' Skywards members switching their allegiance following the airlines' alliance, which could help Qantas' loyalty numbers.
Analysts cited in the article suggest many of the extra Velocity members are likely to be holders of Qantas Frequent Flyer accounts. However, it remains unclear whether those members are actually flying less with Qantas.
Investors should watch whether Velocity's membership and increased redemption activity translate into more business and corporate travellers for Virgin. A key part of Virgin's longer‑term strategy is to win a bigger share of the corporate travel market, which would have clearer revenue implications than membership growth alone.
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