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”.
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.
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).
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.
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.
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.
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?
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.