Point scoring: Qantas, Virgin at war over frequent flyer programs

You’d think it was all blues skies for Qantas as it faces the first real head-to-head competition domestically and internationally since the demise of Ansett a decade ago in September.

As Qantas revamps its ever-growing frequent flyer program, the newly rebranded Virgin Australia, with business class cabins and lounges for the first time, is still to announce its own remake of the Velocity loyalty scheme.

It’s hardly a fair fight when you consider Qantas Frequent Flyer has an estimated 7.8 million members and Virgin Australia just 2.7 million. Qantas has just under 90 per cent of the domestic business market and Virgin Australia just over 10 per cent, yet, brand for brand, Qantas in Australia is only fractionally bigger than its rival. Virgin Australia (1,355,000 domestic passengers in March) boasts it has more flights to more destinations than Qantas (1,440,000), though that comparison excludes Qantas regional subsidiary Qantaslink (425,000).

One of the weapons that will decide what those numbers do in future is the frequent flyer program.

Qantas chief executive Alan Joyce is supremely confident. "We don't have to cling on to the business market,'' he was reported as saying last week. "The business market is very happy to stay with Qantas.''

Nevertheless, when it comes to frequent flyers, Virgin Australia’s new alliance relationships finalised only in the past three months with Etihad, Air New Zealand and Delta are a game-changer – because the airline wasn’t even in the game until then for the loyalty of regular flyers when it had no credible global network.

Now Qantas has unveiled changes to its frequent flyer that increase the rewards and bonuses for those who pay most in first class, business class and premium economy, as well as Qantas Silver and Gold frequent flyers.

Though details are yet to be announced, Qantas will create a new “Platinum One” status level for the most frequent flyers. And Qantas customers will be able to “purchase” Qantas points and status credits on Jetstar.

But what could still be an elephant in the room is that Qantas has said nothing about improving the availability of redemption seats – one of the long-term gripes about Qantas Frequent Flyer. That’s doubly important when Virgin’s Velocity program was rated highly in a global survey last year about the availability of frequent flyer benefits.

“While many see the changes as a step in the right direction, others feel somewhat short-changed,” says independent website australianfrequentflyer.com.au.

“In general, our view is that the changes are designed to discourage Qantas Silver and Gold frequent flyers from switching to the freshly re-branded Virgin Australia.

“The ‘cost’ of the improved benefits to these members seems to be borne by Platinum members (especially those who don't travel on premium tickets) as they haven't been adequately compensated for the loss of their loyalty bonus.

“Conspicuous is the absence of improvements in frequent flyer seat availability.’’

If you’re a frequent flyer, have the Qantas program changes produced for you advantages or disadvantages – or both? Does it make a difference to the attractiveness of either airline group? Or is your company locked into contracts with one or the other? Are there particular issues with the Velocity program you’d like Virgin Australia to deal with?