Battle of the loyalty programs

Virgin Blue started life as a backpackers' airline almost exactly a decade ago. But it became apparent relatively early that it wasn't going to be just any low-cost operation.

Fast-forward 10 years and Sir Richard Branson's little Aussie hatchling is anything but el cheapo: with the installation of its first new chief executive after the retirement of founder Brett Godfrey, Virgin Blue is now going after the "suits" who fly around Australia – and the world – on business.

The new boss John Borghetti was in fact the number three executive at Qantas and effectively ran the airline day-to-day as executive general manager before he left. In particular, he specialised in "product" – everything from seating comfort to frequent flyers and alliances – and it is that expertise assembled over many years that he will use to take on the Qantas group's 65% share of the domestic market and 28% of the international market into and out of Australia.

Mr Borghetti is now immersed in a review of the Virgin Blue group's entire operations, including long-haul subsidiary V Australia and trans-Tasman/Pacific Islands subsidiary Pacific Blue.

He has indicated that one of his initiatives will be to reduce the airline's emphasis on leisure routes and increase the emphasis on business routes.

And one of his prime weapons is likely to be the group's Velocity frequent-flyer program. Though only a fraction of the size of the Qantas program (two million members versus seven million members), the Virgin Blue program is rated highly by customers.

It was recently rated in a survey by US  marketing groups IdeaWorks and ezRez Software in the top handful of world airlines for its availability of seat redemptions.

One of the options on the table at Virgin Blue may be a switch to the Star alliance that includes carriers such as Singapore Airlines and United. VB currently has frequent-flyer reciprocity with a mix of international airlines including Emirates, Delta, Virgin America, Virgin Atlantic and Malaysia Airlines.

The Qantas program, on the other hand, is a key part of the airline's appeal to customers, even though many Qantas frequent flyers have expressed misgivings about the separate issue of in-flight service in forums like this one.

Millions of the program's new members are, in fact, shoppers at Safeway supermarkets, which adds to the pressure on the small number of seats being made available for redemptions. founder Cliff Reichlin says a majority of Qantas FF members rate the program highly, but international seat redemptions have become harder to obtain in the past few months, according to feedback on his website, which hosts a number of frequent-flyer consumer forums. As a result, there are a number of "unhappy campers', he says.

If it comes down to a battle of the frequent-flyer programs, which way will you vote? Does Virgin Blue's Velocity program have enough global reach to compete on even terms with the Qantas program, which is part of the oneworld alliance? Is Qantas Frequent Flyer still the No.1 program for you?