Six changes that would make Virgin Australia Platinum status competitive

Virgin Australia has made massive strides under the leadership of its visionary Chief Executive, John Borghetti. These include the August 2011 relaunch of its frequent flyer scheme, Velocity, which saw the addition of a Platinum top-tier status. Four years on, it is timely to evaluate what this tier has delivered.

It certainly seems like there are now fewer people who are both Qantas Platinum and Virgin Platinum around than there used to be – and that, by and large, they’ve elected to keep earning Platinum status with Qantas over Virgin. The most frequently heard sentiment among very frequent flyers is along the lines of: “Well I don’t get much from it but I might accidentally renew Virgin Platinum anyway”.

Velocity membership cards (picture courtesy Virgin Australia)

Velocity membership cards (picture courtesy Virgin Australia)

Contrast this to what is usually said about Qantas Platinum status. More often than not, Qantas Platinum members seem to value the benefits and as a result, go out of their way to use Qantas more (even in situations where Qantas business class offering on coast-to-coast flights is lagging behind).

Anecdotally, it also seems that Qantas Platinum members exhibit a much higher level of customer advocacy. What Qantas seem to have done is realise that it important for frequent customers to feel recognised – and then acted on that insight.

In contrast: while Velocity Platinum members earn some more points and can get complimentary Hilton Diamond status once on initial qualification, there is not much in the benefits that differentiates the experience from Gold when flying Virgin Australia.

VACBR29

Velocity Gold and Platinum members get access to Virgin Australia’s domestic lounges

From a commercial perspective, it is very important that Virgin Australia maintains its cost advantage over Qantas.

Being practical sorts at Miles Down Under, we wouldn’t suggest that Virgin try to parry Qantas’ offering to Platinum members on many things that require significant airport infrastructure. Another set of lounges for both domestic and international departures various tiers of check-in and priority baggage delivery aren’t going to be feasible.

So what could Virgin Australia do to drive Platinum member loyalty? We’ve got six ideas.

1. Preferential Seating

As a Platinum member booking Virgin Australia domestic flights at the last minute, we tend to find the only available seats in economy are in the back rows and often are middle seats. It is clear that a Platinum member sitting wedged in a middle seat near the back of the plane does not drive brand loyalty, particularly as competitor Qantas actively manage seating availability to try and avoid this problem.

At present the first row of economy, row 3, of Virgin Australia’s Boeing 737 aircraft is blocked for pre-selection by Platinum members. But on peak flights between Australian capital cities, all of the aisle and window seats in row 3 are often gone far in advance. Furthermore, the middle seats in this row seem to often be occupied by people who aren’t even members of a frequent flyer programme, even when all the rows behind have empty seats.

There is a simple solution for Virgin Australia: block out the first several rows of economy seating for Platinum members only. Do not make it possible for airport staff to override this block, except if the plane is completely full (in which case allow Gold members to sit there).

VArow3

Virgin Australia Boeing 737, row 3

2. Onboard food and beverage offering

As a benefit when flying American Airlines in coach, top-tier members of their frequent flyer scheme (AAdvantage Executive Platinum) are entitled to a complimentary beverage and snack.

When flying Virgin Australia in economy class, Velocity Platinum members are entitled to whatever is being served to everyone (such as the below cheese snack).

Given that Qantas seems to spend more on catering on domestic flights in economy, a complimentary beverage and snack for Velocity Platinum members would help to bridge the gap.

VAdomesticYsnack

What about other in-flight recognition? Given the often-bumbling greeting for Platinum members currently delivered on long-haul flights, we’d suggest expanding that should not be a priority.

3. ‘UpgradeMe Platinum Member Offer’

At the moment, Velocity Platinum members get four complimentary upgrades per year from a flexi fare to business class on Virgin Australia domestic flights.

While it made sense at the time of introduction that these could not be used on short haul international routes as, well, Virgin didn’t have short haul international business class – they do now. It would be a sensible investment in the customer relationship to allow Platinum members to use these upgrades on short haul international flights.

Virgin Australia A330 ‘The Business’ (picture courtesy Virgin Australia)

Virgin Australia A330 ‘The Business’ (picture courtesy Virgin Australia)

Furthermore, it would make sense to be able to stack them: i.e. use two to upgrade a saver fare.

Presumably these upgrades currently have relatively high breakage (ie not all of them are redeemed). Virgin Australia would do well to remember that it is trying to build a loyal base of frequent flyers here. A few upgrades costs the airline vastly less than building a pile of airline lounges in some of the most expensive airport real estate in the world. On one view, an upgrade into an empty seat costs an airline nothing at all.

To that end, the goal shouldn’t be to maximise breakage of these upgrades. To that end, Virgin Australia also shouldn’t control capacity for these upgrades from exactly the same inventory as award tickets.

4. Access to Reward Seats

On the subject of award tickets, Qantas will gladly entertain opening up award space for Platinum members on their flights – in any class of service.

By contrast, Virgin Australia offer Platinum members an Economy Reward Seats Guarantee for an Annual Family Trip. The key restrictions are economy class on VA flight numbers only, the benefit only be used once a year and it must be booked at least six months in advance. Virgin Australia seems to have silently changed the terms of this offer – the previous wording for this guarantee referred to any destination served by Virgin Australia’ partners.

Virgin Australia shorthaul business class

Virgin Australia short haul business class

While no doubt there are some people who want to redeem four return economy awards on the same flights six months out, this benefit is nowhere near competitive with Qantas Platinum.

We prefer to make business class redemptions for 1 or 2 seats on the same flight and to book close in, so this benefit may well not exist at all. Virgin Australia could easily drive more loyalty by actually making it possible for Platinum members to use their points to fly where they want to go.

5. Phone service fee waiver

As it is, Platinum members are paying with their time when you call Virgin Australia by phone. A few weeks ago we spent over an hour on the phone trying to get flights from Brisbane to New York, via Los Angeles booked with our Velocity points. Three separate phone agents insisted that the only available routing was via Abu Dhabi on Etihad, with a 20-hour layover. We knew the Virgin Australia flight to Los Angeles and the connecting flight on Delta were both available and we really had to push to get an agent to manually look up the seats and marry the segments so that the routing could be booked. It is a real negative to have wasted hours of your time and then be lumped with a bill for privilege (for something you would rather do online but cannot).

Equally the AU$35 (domestic) / AU$60 (international) change fee on award tickets aren’t essential to Virgin’s revenue and waving them for Platinum members would be a justifiable investment in the customer relationship.

This would also put Virgin Australia a step ahead of Qantas, which already waives these fees for Platinum One level members as well as for anyone trying to book a partner award that cannot be booked online.

6. Tightening up Virgin’s virtual global alliance

Across Air Berlin, Delta, Etihad, Hawaiian Airlines, Singapore Airlines (and Silkair), South African Airways, Virgin Atlantic, Virgin America and Etihad, there are huge inconsistencies in how easy it is to actually get the benefits to which Platinum members are entitled.

Virgin’s global alliance partnerships are very confusing – particularly, it seems, to airport staff. How are customers expected to follow it?

Velocity Platinum members used to get access to the Etihad First Class Lounge in Abu Dhabi (when it existed)

Velocity Platinum members used to get access to the Etihad First Class Lounge in Abu Dhabi (when it existed)

In addition to investing in tidying up the delivery of those benefits, we see significant scope to negotiate additional benefits with airline partners to further differentiate Velocity Platinum status and better compete with Qantas.

For example, at present Velocity Platinum members only get a 50% elite points bonus on Etihad (the same as Gold), compared to the 100% bonus for Platinum’s on Virgin Australia flights.

As another example, it would be a valuable benefit if Velocity Platinum members had access to Singapore Airlines’ flagship business class lounge in Singapore, the SilverKris Lounge (as Air New Zealand’s top tier Airpoints Elite members do already when flying between the Lion City and New Zealand).

Virgin Australia is still effectively a challenger brand in competing for the business travel market. What it needs are frequent flyers and strong advocates for its offering. We’ve outlined above six changes that Virgin could make that would deliver in spades on customer loyalty from some of the most profitable customers an airline can have.

Are you a Qantas Platinum member? What would make you consider switching to Virgin Australia? Leave your thoughts below.

2 Comments on "Six changes that would make Virgin Australia Platinum status competitive"

  1. Interesting post MDU. I’ve been a Virgin Australia Platinum shortly after this status level first lauched (being status matched from Qantas Platinum, which I’ve continued to hold over a number of years, occassionally getting within a few status credits of P1 even) and I seem the outlier to your posit, because I find Qantas Platinum more underwhelming as the years have gone by (and question why I put any effort in retaining).

    I don’t disagree that their isn’t as much segmentation between VA Gold and VA Platinum, and that there are certainly things VA could do to make Platinum seem more “special”, but given it’s so easy to earn and retain VA Platinum (whereas Qantas Platinum mostly requires some planning) I do think that needs to be factored in.

    Admittedly I only fly Virgin Australia and it’s partners in Business or First (apart from the odd short haul SQ economy fare when regional seat J pricing is too outrageous), but it’s a very rare flight that I ever come off feeling hard done by (on Virgin Australia and to a slightly lesser extent NZ at least, SQ and EY can sometimes be a mixed bag). I love that VA give Platinums 10 points per dollar spent on domestic J fares (which, for me, is a large proportion of my VA activity) and that they are nowhere near as stingy with point and status credit earn on partners as Qantas is. Platinum Upgrades are somewhat wasted if used for anything other than Coast to Coast services (which is limiting I agree) where they are worth their weight in gold (given the ridiculous J fare pricing on these routes).

    Award availability on VA domestic services (which is where the vast bulk of its operations are) is excellent, even at the last minute. VA International, given it’s smaller route network and flight frequency/capacity, is naturally restrained award wise but I would venture much better than Qantas if scaled up to meet their routes/frequency/capacity (which is obviously much larger than VA’s).

    Qantas may entertain making seats available for redemption (which is a bit like hiding the good stuff until asked directly for it) for Platinums but there is no guarantees here and little transparency (and I find it annoying to have to beg to try and redeem some of my over-accumulating Qantas points) . Given the recent purge of experienced Qantas priority line staff in favour of cheaper call centre operators in Hobart, New Zealand and other overseas locations I think there will be much less flexibility here going forward (possibly even for P1s, who have generally had a good track record here). It’s all far too lottery like for my liking (just like upgrades have been for a while). VA’s “if a upgrade seat is available, it’s yours”, even months ahead of travel, is far better for me.

    I did find it amusing reading about the VA cheese box in Economy, only because I so frequently find that a not too dissimilar thing on offer (other than an offer of soup) when travelling in Business on Qantas (cheese and crackers is a snack on VA Business, never a meal).

    Qantas Platinum is not worthless, but I find the hype and marketing of it far exceeds the experience. Virgin don’t oversell their Platinum and I find it offers some useful features. Each scheme has strengths and weaknesses, and both have room for improvement. Overall, given the ease of earning and retaining VA Platinum I tend to look on it more favourably than Qantas Platinum (which while serving some purpose, sometimes has me questioning why I bother). I guess I’m providing the flip side viewpoint.

    • Kieran,

      Thanks for the well thought out response. Absolutely, we agree that there are many positives to VA’s program, as you say the 10 points/$ on domestic fares along with 100% points bonuses on partners like Agoda, car hire etc. Their award availability is certainly more plentiful than Qantas along with being cheaper in both miles and taxes.

      However, the point of the post is to look at what Virgin could do to improve their brand loyalty by possibly reviewing what they do for their Platinum members. That’s where we find the program falls apart when we started asking ourselves why would we want to renew Platinum with Virgin Australia.

      Anecdotally, there’s certainly an aspirational quality to Qantas Platinum, something we don’t believe Virgin Australia delivers.

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