Virgin Australia and Singapore Airlines have launched their world-first conversion between their respective frequent flyer programs, giving members of both the ability to transfer their points to obtain an ideal outcome.
Under the program, Virgin's Velocity members and Singapore Airlines's KrisFlyer members can convert points at a rate of 1.35 to 1 from Wednesday, which is better than the rate that some travellers had forecast on online forums like The Australian Frequent Flyer and FlyerTalk.
"We have come up with that as a figure that we think will balance both a great deal for members but also makes sense for us," Velocity chief executive Neil Thompson told The Australian Financial Review. "It is better than some people would have expected. It is also really important to keep it simple."
To take advantage of the initiative, travellers need to be members of both the Velocity and KrisFlyer programs.
As an example, a Velocity member who bought an economy ticket on Singapore Airlines and wants to upgrade that to business class using points will receive one KrisFlyer point for each 1.35 Velocity points transferred.
In the other direction, a KrisFlyer member who earned a small number of points on a Singapore Airlines flight and is concerned about the three-year expiry period can transfer them to Velocity at a rate of 1:35 to 1 and they will not expire for another three years. Members will need a minimum of 5000 points to transfer.
The deal will also give Velocity members access to Star Alliance awards available through KrisFlyer, as Virgin is not a member of any of the three major global airline alliances, which include Oneworld and SkyTeam.
Star Alliance chief executive Mark Schwab, who is visiting Australia this week to meet with the 10 Star carriers active in this market, said a meeting with Virgin was not on the agenda for his visit.
"Ultimately would it be good for Star Alliance to have a home carrier in Australia?" Mr Schwab said. "Yes. It is a very big and important international travel market. And particularly connections within Australia would be a good thing for us. But we are not having – and I want to emphasise – we are not having any active discussions [with Virgin] at this particular point."
He said it was natural, however, that Virgin was deepening its ties with Star Alliance carriers Singapore Airlines and Air New Zealand given both had equity stakes in the Australian airline.
Mr Thompson said he believed the points exchange with Singapore Airlines would prove popular with a particular of the market.
"There has always been a strong market in Australia, for a segment of business travellers who use both Singapore and Virgin or Singapore as a second or alternative carrier," he said. "Particularly traffic up into North Asia via Singapore. So I think it is going to be popular."
Velocity has 4.5 million members and wants to increase that to 7 million by 2017. Rival Qantas has 10.3 million members of its longer-running loyalty program. However, alliance partners Qantas and Emirates have ruled out a points swap along the lines of the Virgin/Singapore Airlines deal for the time being. Qantas frequent flyer members are therefore unable to upgrade to a higher class on Emirates flights by using their points.