Major changes to Velocity Frequent Flyer announced 17/10/24

[ozstamps]

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Many, many, thanks for proving my point, with an official ACCC figure.

The one-off, of Rex dropping from 5.4% to 1.4% nationally will no doubt see things wash out, and normalise soon enough.

Even so, Virgin had only a small 35% national market share in December, the Qantas group as I commented, had near all the rest, and I predict that 35% Virgin market share will slide, all through 2025.

In part due to these wholesale changes to Velocity, which I feel is a huge Free Kick to the Qantas Group..

I might well be wrong of course - we will all see the figures soon enough. So will the stockmarket. This was not the year to touch ANYTHING to mess with past flyer loyalty and goodwill IMHO.

I do hope you'll update this thread as each new market share figure is published. Those splitting hairs and lamely pretending Qantas/Jetstar are not the one dominant competitor, does not change the real figures for Virgin in any way.

 

[simmomelb]

I'm not sure about the higher value customers, it seems to me that these changes favour the lower end of the market?
As an example, I did a quick return trip to Lismore this week. LST-MEL-SYD-BNK, then back again. Cost around $1500, J all the way. 330 SC's under current rules, 125 SC's after April.

Exactly my point. You will need to take a lot more flights & spend a LOT more money to collect the same number of status credits to obtain and maintain the same level of status.
How are the changes favouring the lower end when you will need to spend between 2 to 3 times more from April 2nd for the same number of status credits to obtain and maintain Gold (400 to maintain) & Plat (800 to maintain)?
If it were favouring the lower end of the market, people here wouldn't be complaining.

 

[serfty]

I do hope you'll update this thread as each new figure is published. Splitting hairs and pretending Qantas/Jetstar are not the one dominant competitor, does not change the real figures.

Personally I refuse to fly Jetstar domestic.

With that I consider it quite reasonable to split Qantas and Jetstar.

I do note you did not mention "group" (or Jetstar) in your post quoted here: (entire post cited below)

Market share domestic figures are published all through the year, and they do not lie, and my prediction is Virgin will slide ever further behind Qantas on that metric, proving this theory.

Spoiler: Cite

I do agree if EVERY Velocity members had a universal Status expiry date as all savvy USA airline and hotel plans have, and had always had, things would be different. If the entire global member base re-set April 1 like Hilton etc, whole different ball game.

But as we have the current wackadoodle Velocity system, where there are rolling status expiry dates across all 12 months, it is skewed.

And everyone has had near 6 months advance notice on this huge downgrade to the Velocity system.

Folks could have decided 5 months out they were never going to spend the now required $5000 a year with Virgin to renew, and chose to beef up their Qantas Status moving forward, as that is a plan that cleverly has not altered.

So if their plan expiry date was April 1 or May 1 etc, possibly they've been spending little for 5 or 6 months with Virgin.

This move WILL hit revenues, and more and more as the 2025 year goes on, and more Velocity members get the rude shock that Gold is now unattainable for them, despite maybe 10-20 years of loyalty to Virgin.

Market share domestic figures are published all through the year, and they do not lie, and my prediction is Virgin will slide ever further behind Qantas on that metric, proving this theory.

Potential stockmarket investors clearly do not buy into any company in a duopoly whose market share is tanking, and that is what will be occurring if the float goes ahead. So an 'own goal' for Bain here. It WILL cost them money.

 

[jase05]

Personally I refuse to fly Jetstar domestic.

Yep, I refuse to fly them full stop so it comes down to VA v QF BFOD for my leisure trips and I would say 9 out of 10 flights in J that VA is usually better priced and often substantially plus I actually enjoy my VA flights more

 

[simmomelb]

Yep, I refuse to fly them full stop so it comes down to VA v QF BFOD for my leisure trips and I would say 9 out of 10 flights in J that VA is usually better priced and often substantially plus I actually enjoy my VA flights more

I flew them 3 months ago (for the first time) and my better half wanted to kill me.
We all had to line up 45 minutes before our flight like sheep to get our carry on tagged to show it was under 7KG for boarding, or pay the fee right there. Won't be making that mistake again or that relationship will be over, lol

 

[nutwood]

Exactly my point. You will need to take a lot more flights & spend a LOT more money to collect the same number of status credits to obtain and maintain the same level of status.
How are the changes favouring the lower end when you will need to spend between 2 to 3 times more from April 2nd for the same number of status credits to obtain and maintain Gold & Plat?

I suppose it comes down to the definition of "lower end". I was considering those who regularly book Business as higher value customers, whilst those who occasionally take the family on holiday, booking Choice and pooling, as lower value. Not sure if it looks that way when you run an airline but the problem with focusing on the latter group is that it's a very price sensitive area and Jetstar rules it.
Perhaps that's the logic? By linking status to $'s, you give the more occasional flyers an incentive to fly Virgin as they get lounge access. Higher value passengers get lounge access as part of their Business perks and $10k of flying holds Platinum whilst keeping the 2000 SC's Platinum Plus a bit exclusive.

 

[SeaWolf]

Those splitting hairs and lamely pretending Qantas/Jetstar are not the one dominant competitor, does not change the real figures for Virgin in any way.

I guess it depends on if you think of Qantas and Jetstar as two separate carriers or one carrier with two separate paint jobs. I'd note that even Qantas group don't seem too certain about which it is, changing their mind depending on the situation.

 

[simmomelb]

I suppose it comes down to the definition of "lower end". I was considering those who regularly book Business as higher value customers, whilst those who occasionally take the family on holiday, booking Choice and pooling, as lower value. Not sure if it looks that way when you run an airline but the problem with focusing on the latter group is that it's a very price sensitive area and Jetstar rules it.
Perhaps that's the logic? By linking status to $'s, you give the more occasional flyers an incentive to fly Virgin as they get lounge access. Higher value passengers get lounge access as part of their Business perks and $10k of flying holds Platinum whilst keeping the 2000 SC's Platinum Plus a bit exclusive.

Yep, all about the dollars you spend over 12 months, (by your review date) not the type of airfare you've bought, other than Lite fares.
You can currently take a MEL - OOL return bus class flight, via Sydney on DSC and maintain Gold for the entire year for under 1k, so very little value to the airline, whilst maintaining your status.
No chance of that under the new system with a yearly dollar value attached to each member.

 

[clifford]

You can currently take a MEL - OOL return bus class flight, via Sydney on DSC and maintain Gold for the entire year for under 1k, so very little value to the airline, whilst maintaining your status.
No chance of that under the new system with a yearly dollar value attached to each member.

There might be a few too many loopholes with Velocity at the moment, but the new status requirements are somewhat over the top for Australia and will mean fewer people wanting to fly VA, unless the price is very right. And if the price is very tight, where does that leave VA's income?

VA will either change these new frequent flyer arrangements or be looking at administration in a few years. Or (unlikely), QR will step in and become a major shareholder (via various proxies).

In any case, the future of VA looks a little bleak to me. Enjoy it while you can.

 

[anat0l]

VA will either change these new frequent flyer arrangements or be looking at administration in a few years.

Hah, the last time they went into administration, their debts - for all intents and purposes - disappeared. Pretty sweet get out of jail free card with minimal give.

Qantas may be too big to fail, but Virgin is too important to fail. Couple that with the prevailing anti-Qantas (and anti-Jetstar) miasma, I think we'll always see them around, regardless of what they do.

I suppose before they go to market, they want to make changes that will position them for vast profitability. If their profits drop, they could always improve the programme and "give back" or roll back some changes, so appease shareholders. If there is no material financial detriment, then they successfully enhanced the programme, and whoever spearheaded it can add that success to their resume.

 

[MooTime]

There might be a few too many loopholes with Velocity at the moment, but the new status requirements are somewhat over the top for Australia and will mean fewer people wanting to fly VA, unless the price is very right. And if the price is very tight, where does that leave VA's income?

VA will either change these new frequent flyer arrangements or be looking at administration in a few years. Or (unlikely), QR will step in and become a major shareholder (via various proxies).

In any case, the future of VA looks a little bleak to me. Enjoy it while you can.

I'd have to say that the majority of flying peeps don't give a rat's about status credits and status.

Most travellers on VA are leisure.

Peak hour yes the priority line is long but outside those times it's a lonely line.

 

[HS-TQE]

VA will either change these new frequent flyer arrangements or be looking at administration in a few years. Or (unlikely), QR will step in and become a major shareholder (via various proxies).

If an IPO does ever (eventually) get off the ground, QR would be subject to the "takeover" rule (plus FIRB) for stakes over 20% as a reinstated public company.

If QR wants to go above their current 25% now they would have to go through the FIRB process again as VA is currently a private company.

 

[clifford]

If an IPO does ever (eventually) get off the ground, QR would be subject to the "takeover" rule (plus FIRB) for stakes over 20% as a reinstated public company.

If QR wants to go above their current 25% now they would have to go through the FIRB process again as VA is currently a private company.

Yes, I agree. I expect that QR will be looking at ways of maintaining their additional services ex Australia in the event that "control" of VA changes to a hostile entity or that VA (as such) goes under in due course.

 

[openseat]

This has been an interesting thread. I, sadly, agree that the changes to Velocity have been a disaster for the duopoly market of Australia. Far from pressuring QF to a dollar based earn system, it will back fire.
Like others I'll just be agnostic once my status goes below Gold. Maybe just Lite and annual lounge membership for Domestic flying.

 

[anat0l]

I guess in some sense some of you (maybe those in QF as well or jumping ship) better hope that Velocity's spend based changes fail, the more miserably, the better.

If the changes succeed or have little effect on Velocity's and/or VA's base, it may just incentivise QF to go that way. After all, everyone's always looking for the greatest new way to make more profit for shareholder benefit...

 

[SeaWolf]

I guess in some sense some of you (maybe those in QF as well or jumping ship) better hope that Velocity's spend based changes fail, the more miserably, the better.

I think you've hit the nail on the head there, a lot of the responses in this thread are really wishful thinking. Hoping that this will be such a disaster that Virgin will either be forced to back out or will collapse entirely.

I'm sure they'll lose some customers over this, but I think the impression that it will cause some sort of exodus from the airline is pure nonsense. They'll have modelled and focus grouped the hell out of this before they made the change and they'll have talked to their partners about their experiences switching to this system and going up against competitors that haven't.

I've chatted to some of my work colleagues who fly regularly on Virgin (including some Golds and even a couple of Plats) and the response was either indifference or being largely unaware, despite the emails about it. For them the status has just happened as a result of them flying a lot, it's not something they've researched and worked to get to.

We tend to forget that we're a very select group in here and most certainly not representative of the broader flying public.

 

[HS-TQE]

I guess in some sense some of you (maybe those in QF as well or jumping ship) better hope that Velocity's spend based changes fail, the more miserably, the better.

If the changes succeed or have little effect on Velocity's and/or VA's base, it may just incentivise QF to go that way. After all, everyone's always looking for the greatest new way to make more profit for shareholder benefit...

Agreed. As stated previously sometimes the loudest can also be a vocal minority. Also as pointed out by others in another post, a large amount of VA customers since 2.0 started are leisure customers, so if that's the case, the proposed changes wouldn't effect Velocity much?

Having said that, I also do agree they will lose customers over the changes as also stated in previous posts but the question is by how much?

 

[Bagpuss]

Having said that, I also do agree they will lose customers over the changes as also stated in previous posts but the question is by how much?

Which will be difficult to really know.

I've just had my platinum renewal and I'll be surprised in the next 12 months if I get a single VA sector. I've changed jobs which means I no longer regularly fly and my only planned trip within 12 months currently is long haul international.

So why they may think I'm a lost customer it's just a change of circumstances from frequent flyer to non flyer.

 

[jakeseven7]

Agreed. As stated previously sometimes the loudest can also be a vocal minority. Also as pointed out by others in another post, a large amount of VA customers since 2.0 started are leisure customers, so if that's the case, the proposed changes wouldn't effect Velocity much?

Having said that, I also do agree they will lose customers over the changes as also stated in previous posts but the question is by how much?

Even anedoctally observing the VA2 lounges there are hardly any business / corps in there these days at all…. It’s like they’ve all migrated. None of my business friends are VA WOB anymore, at best it’s BFOD and a lot are now QF WOB.

 

[anat0l]

Even anedoctally observing the VA2 lounges there are hardly any business / corps in there these days at all…. It’s like they’ve all migrated. None of my business friends are VA WOB anymore, at best it’s BFOD and a lot are now QF WOB.

I would think many SMEs are still on VA, although probably in Y otherwise they'd be BFOD.

Many companies have contracts with VA or QF; don't know what are the lengths of terms (i.e. before they can change their minds), but then again I'm not sure how many would switch due to a change in the loyalty proposition.