DJ to "Spin Off" Velocity [not really, simply a separate internal unit]

[jneufeld]

From AusBT

Virgin Australia is spinning off its Velocity frequent flyer scheme into a new “stand-alone business unit” headed by a former top-ranking manager of Qantas’ own frequent flyer programme.

The move will see Neil Thompson, who left Qantas as Group General Manager of Loyalty Marketing in 2008 and has since worked at a US-based consultancy specialising in the “optimisation and monetisation of loyalty programs”, appointed as Chief Executive Officer for Velocity Frequent Flyer and reporting directly to Virgin Australia CEO John Borghetti.

Virgin Australia has close to three million Velocity frequent flyers, and Borghetti says the programme – which we voted as 2011's Best Frequent Flyer Programme for Australian Business Travellers – “remains a key growth opportunity for our business.”

“We have done a lot of work over the past 18 months to create a solid foundation for the Frequent Flyer program. The next stage will be to position it as the leading loyalty program in Australia and as a key driver of future earnings.

”Qantas has an estimated 8.5 million members in its own frequent flyer program and seeks to boost this to 10 million over the next financial year.The Red Roo’s frequent flyer revenue tops $1 billion per year, from which it declared $119 million in earnings in the second half of 2011, so it’s no surprise that Virgin wants to see some similar action from Velocity.

 

[Mogul]

re: DJ to "Spin Off" Velocity [not really, just making a separate internal unit]

Explains the "enhancement"

 

[777]

re: DJ to "Spin Off" Velocity [not really, just making a separate internal unit]

Could be a worry. I just hope that it doesn't get devalued as frequent FLYER program to accomodate it's role as a "driver of future earnings."

 

[ric_melb]

re: DJ to "Spin Off" Velocity [not really, just making a separate internal unit]

Establishing it as a separate business unit. I think AusBT are getting a little enthusiastic caling it a spin off in the usual terms of the word.
Didn't do anything for the share price today!

 

[markis10]

re: DJ to "Spin Off" Velocity [not really, just making a separate internal unit]

Spin off means getting rid of it, so its a poor use of words. Creating a separate entity or business unit with its own P&L makes sense, and as already mentioned explains recent changes.

 

[simongr]

re: DJ to "Spin Off" Velocity [not really, just making a separate internal unit]

Any chance to change the thread title - so we aren't as misleading as AusBT?

This was probably an inevitable move. I do fear though that the person who was driving QF enhancements in mid 2000's then went and specialised in monetisation of FF programs is heading this up.

 

[lovestotravel]

re: DJ to "Spin Off" Velocity [not really, just making a separate internal unit]

I smell lots of enhancements coming

 

[MarkD]

Time will tell, but if it's the same guy that screwed with qff then, well, never mind, we all know what happened there. When was his reign of terror at qf?

 

[Deleted member 29185]

re: DJ to "Spin Off" Velocity [not really, just making a separate internal unit]

The next stage will be to position it as the leading loyalty program in Australia and as a key driver of future earnings.

What the heck is their morbid fascination with replicating QF? They were going so well at creating a difference. Oh well, so much for Velocity then......I don't particularly like being part of a "key driver of future earnings". Who said JB placed a greater emphasis on the client rather than the share holder?

 

[Simo]

re: DJ to "Spin Off" Velocity [not really, just making a separate internal unit]

I hope VA keeps different.

I see QF a lot like Telstra.

Telstra is the market leader in volume but not the best innovator in the market.

I see VA a lot like Optus or Voda as they are pushing products and services into the market but sometimes don't get it as right as could be possibly done.

 

[JohnK]

re: DJ to "Spin Off" Velocity [not really, just making a separate internal unit]

I don't like "enhancements" or having too many cooks involved in the FF business.

I wonder how much points will be devalued if Velocity is indeed sold off....

 

[Justchecking]

re: DJ to "Spin Off" Velocity [not really, just making a separate internal unit]

I hope VA keeps different.

I see QF a lot like Telstra.

Telstra is the market leader in volume but not the best innovator in the market.

I see VA a lot like Optus or Voda as they are pushing products and services into the market but sometimes don't get it as right as could be possibly done.

I reallly hope Virgin are nothing like an airline quivalent of Optus. Not if the frustration of my broadband account and dealings with that company qre anything to go by. :evil:

 

[QF WP]

I think it's a good idea to create a separate business for all the rasons already shown. Just sibling as future enhancements are true to label for US.

 

[QF WP]

I hope VA keeps different.

I see QF a lot like Telstra.

Telstra is the market leader in volume but not the best innovator in the market.

I see VA a lot like Optus or Voda as they are pushing products and services into the market but sometimes don't get it as right as could be possibly done.

+ 1 simo, my thoughts exactly. From my experience, it took a while for me to embrace VA, but not Optus - I was onboard from Day 1.

 

[Simo]

re: DJ to "Spin Off" Velocity [not really, just making a separate internal unit]

I reallly hope Virgin are nothing like an airline quivalent of Optus. Not if the frustration of my broadband account and dealings with that company qre anything to go by. :evil:

Lets hope VA doesn't crash as often as your internet service

 

[Noob]

re: DJ to "Spin Off" Velocity [not really, just making a separate internal unit]

I don't like "enhancements" or having too many cooks involved in the FF business.

I wonder how much points will be devalued if Velocity is indeed sold off....

It isn't being sold off - just poor wording on behalf of AusBT.

 

[BAM1748]

re: DJ to "Spin Off" Velocity [not really, just making a separate internal unit]

Usually a new entity would mean that entity itself would be required to increase it's profit even though it's dependant on the airline for customers. It's like a middle man between the frequent passenger the aircraft, but it also requires it's slice of profit.

I would guess there will be more tweaking to get another dollar out of Velocity members. If they have 3M members and you can squeeze another $2 out of each then that's $6M straight on the bottom line.

Don't forget, it's all about the money.

Matt

 

[markis10]

re: DJ to "Spin Off" Velocity [not really, simply a separate internal unit]

Usually a new entity would mean that entity itself would be required to increase it's profit even though it's dependant on the airline for customers. It's like a middle man between the frequent passenger the aircraft, but it also requires it's slice of profit.

I would guess there will be more tweaking to get another dollar out of Velocity members. If they have 3M members and you can squeeze another $2 out of each then that's $6M straight on the bottom line.

Don't forget, it's all about the money.

Matt

Why do you think its about squeezing more $$ out of the members because its being moved to its own profit centre, the same thing has happened to QFF and I would say the move resulted in better opportunities for members and value, albeit at the expense of direct earn cards!

 

[BAM1748]

re: DJ to "Spin Off" Velocity [not really, simply a separate internal unit]

Why do you think its about squeezing more $$ out of the members because its being moved to its own profit centre, the same thing has happened to QFF and I would say the move resulted in better opportunities for members and value, albeit at the expense of direct earn cards!

Squeezing more dollars out of people doesn't automatically mean the service declines, generating more income could mean adding value in the right spots.

Why does any business make structural changes? To improve the profit.

Matt

 

[markis10]

re: DJ to "Spin Off" Velocity [not really, simply a separate internal unit]

Squeezing more dollars out of people doesn't automatically mean the service declines, generating more income could mean adding value in the right spots.

Why does any business make structural changes? To improve the profit.

Matt

Sure, but that does not mean by default that the unit in question thats moved becomes more profitable at the expense of the customer, some times its done to identify what its been hiding, such as a less than profitable airline, again QF is a case in point for its international arm.