How Is Velocity’s New Tiered Reward Pricing Working?

Last month, Velocity Frequent Flyer introduced tiered Reward Seat pricing. Instead of a fixed price based on the distance travelled, there are now three different pricing “tiers” for domestic Virgin Australia Economy flights booked with Velocity points.

Here’s the new Velocity Reward Seat pricing table for Virgin Australia domestic flights, as per the Velocity Frequent Flyer website:

Velocity Frequent Flyer promoted this change as a good thing for members because they can now access cheaper Reward Seats at the “Tier 1” level. And there has been no change to the price of Tier 2 rewards.

But Tier 3 rewards are 20-25% more expensive than before. Velocity also now charges Tier 3 reward pricing to Gold and Platinum members using their annual “Guaranteed Economy Reward Seat” benefit.

After announcing this change in early June 2023, Velocity Frequent Flyer immediately implemented the lower Tier 1 pricing. But the higher Tier 3 pricing didn’t take effect until 5 July. (The Velocity program terms and conditions require that members receive at least 30 days of notice before the cost of rewards increases.)

This date has passed and Velocity is now pricing selected Economy Reward Seats at the higher Tier 3 levels. So, what’s changed? And are Velocity members better or worse off overall?

What determines whether a Reward Seat is Tier 1, 2 or 3?

You can easily check how many Velocity points it costs to book a Tier 1, 2 or 3 reward flight in the table shown above.

But Velocity hasn’t publicly revealed the criteria it uses to determine which tier a specific reward is priced at. It just says that the three pricing levels are “based on the availability of and demand for Economy Reward Seats for a particular flight at a given time”.

You can find many examples where Economy reward seats for different flights on the same route and date are priced at three different levels. (In the screenshot below, note that the differentiated Business reward pricing is because only the 10.35am flight has a reward seat available in Business.)

I’ve even seen examples where the 6am flight from Melbourne to Sydney has reward seats priced at the Tier 2 level, while the 6.15am flight is Tier 1 and the 6.30am departure is Tier 3. That doesn’t seem terribly logical.

Reward tier pricing linked to commercial fare availability?

While researching this article, I analysed award availability and pricing on lots of Virgin Australia flights across different routes and travel dates. I couldn’t find a pattern that held true 100% of the time, but I did find a fairly clear trend.

In general, it seems that Velocity Frequent Flyer is pricing reward seats at the lowest “Tier 1” level if there is T class availability on the same flight. This is the third-lowest Economy fare class on Virgin Australia, so T class is generally found on flights with lots of seats still available for sale at cheaper airfares.

I also noticed that most of the flights at Tier 2 pricing have availability in P class, which is the fifth-lowest Economy fare class. And where “V” was the lowest available fare class, Tier 3 pricing applies.

I did find exceptions to this rule. For example, I found a Sydney to Melbourne flight that had T class availability but was priced as a Tier 2 reward. But this pattern seems to apply most of the time.

For what it’s worth, to redeem the free Virgin Australia flight that comes with the Amex Velocity Platinum credit card, there needs to be either T or Q class availability. (Q is the fare class between V and T.) This means it’s a bit easier to redeem the free Virgin Australia flight through Amex than it is to find rewards at the “Tier 1” price.

Book further in advance to access lower reward pricing

As part of my research, I also observed how many reward seats were available at each of the different pricing tiers when booking at different times.

I noticed that reward seats tended to be more expensive when booking within a few weeks of departure. But the further in advance you book, the more reward seats are available at the lowest Tier 1 price.

For example, when searching for Reward Seats on the Sydney to Melbourne route for travel next week, I found that only 41% of flights had reward seats available at all. Of those with availability, only 8% had a Tier 1 reward available. But when I searched for Sydney to Melbourne flights on a random date in June 2024, every single flight that day had Tier 1 rewards available.

If Virgin is indeed linking its Reward Seat pricing to commercial fare class availability, that makes perfect sense. The same rule applies when booking commercial tickets: If you book further in advance, generally, you’ll be able to access cheaper airfares.

Booking Virgin Australia awards via partner airlines

Although Velocity Frequent Flyer has implemented dynamic pricing on Virgin Australia domestic Economy flights, this isn’t the case when booking through partner airlines. For example, when redeeming United MileagePlus miles, Etihad Guest miles or Singapore Airlines KrisFlyer miles for a Virgin Australia flight, you’ll still just pay one fixed price.

Furthermore, partner airlines still seem to have access to all of the same award inventory on Virgin Australia flights as Velocity Frequent Flyer members.

Therefore, if a cheap Tier 1 reward is available on a Virgin Australia flight, it probably makes sense to book it with Velocity points. But if you can only get more expensive Tier 3 pricing, booking through a partner airline could make more sense.

As an example, Etihad Guest only charges 6,000 miles (plus taxes) to book a Virgin Australia flight from Melbourne to Sydney. If you have Amex Membership Rewards points, you could transfer these to Etihad Guest and book through that program – rather than paying 9,900 Velocity points for a Tier 3 reward.

Matt Graham

The editor of Australian Frequent Flyer, Matt's passion for travel has taken him to over 80 countries… with the help of frequent flyer points, of course!
Matt's favourite destinations (so far) are Germany, Brazil & Kazakhstan. His interests include economics, aviation & foreign languages, and he has a soft spot for good food and red wine.

You can connect with Matt by posting on the Australian Frequent Flyer community forum and tagging @AFF Editor.