Final month, Virgin Atlantic’s Flying Membership loyalty program teased big modifications, particularly a shift to dynamic pricing and extra redemption and points-earning alternatives. These modifications will start Oct. 30, however the specifics are nonetheless to be introduced.
Per a press launch, costs for award seats will “differ in step with demand;” due to this fact, frequent flyers can anticipate to pay extra factors for extra in-demand flights. Whereas Virgin Atlantic has not but revealed the elevated costs, it has promised that flights from the U.S. to Europe will begin at simply 6,000 Virgin factors, the bottom variety of factors any program expenses for transatlantic flights to Europe.
So, that is certainly all excellent news, proper? Properly, not essentially.
Delta Air Strains owns a 49% share of Virgin Atlantic, so it is laborious to not assume Delta has not less than accredited the entire modifications, if not created them. So, why does this matter? Delta was one of many first airways to introduce dynamic pricing, which has created poor client redemption charges, corresponding to a Delta One award seat now costing upward of 375,000 Delta SkyMiles.
Realistically, with Delta proudly owning a large stake in Virgin Atlantic, what’s the finest we are able to hope for to make this system worthwhile but aggressive?
As a loyal Virgin Atlantic passenger for a few years, having flown each plane kind the provider operates, I’ve earned and redeemed Virgin factors for so long as I can bear in mind. Whereas Flying Blue has lately change into my SkyTeam loyalty program of selection, Virgin Atlantic’s Flying Membership program has all the time held some worth, regardless of my grumbles with its excessive surcharge charges.
With this system present process a serious shift Oct. 30, listed here are the modifications I hope to see from the Flying Membership reinvention.
Associated: Virgin Atlantic Flying Membership: The best way to earn and redeem factors for optimum worth
An inexpensive cap on dynamic pricing
Virgin Atlantic’s Flying Membership program has retained a really affordable award chart, beginning at simply 10,000 Virgin factors for off-peak economy-class flights between the japanese U.S. and the U.Okay. Whereas this system imposes very excessive provider surcharges, that fee is decrease than the charges of competing applications, and availability is often first rate.
Each day E-newsletter
Reward your inbox with the TPG Each day publication
Be a part of over 700,000 readers for breaking information, in-depth guides and unique offers from TPG’s specialists
With a shift to dynamic pricing, my greatest fear is how excessive these award costs would possibly rise for peak-season flights. Because the Flying Membership program guarantees that low-demand economy-class flights will begin at simply 6,000 Virgin factors, I hope that when these flights function utilizing dynamic pricing, there’s a affordable cap on the variety of factors it’ll value to e-book the flight, no matter how excessive money costs rise.
Whereas a one-way 155,000-point business-class seat to London can be a lot increased than present charges, it might nonetheless be aggressive with different applications over the busy summer season interval.
Associated: Is Virgin Atlantic premium economic system price it on the A330-900neo?
The flexibility to pay surcharges with factors
Virgin Atlantic expenses a few of the highest carrier-imposed surcharges of any airline on the earth, including about $2,000 to the price of a round-trip business-class redemption throughout the Atlantic. If I had one want for the Flying Membership program, it might be for a pointy discount in these surcharges. Nonetheless, I am additionally a realist.
Permitting members to pay these surcharges with Virgin factors at a fee of 1 cent per level would enhance this system’s attractiveness whereas preserving it aggressive. For instance, members may redeem an extra 200,000 Virgin factors to save lots of the $2,000 in surcharges. Nonetheless, per our October 2024 valuations, Flying Membership factors are price 1.4 cents per level, so that you would not essentially be maximizing your factors with this redemption.
However extra selection isn’t a foul factor for my part.
Associated: 10 issues to find out about flying Virgin Atlantic’s tremendous enterprise class, the Retreat Suite
Reductions on surcharges throughout off-peak durations
There have been experiences that Flying Membership may even dynamically value its surcharges underneath the brand new mannequin.
I am unable to consider another airline program that does this (they both cost the total surcharge or none in any respect), and this could be an uncommon path to take.
In idea, this might imply that on peak durations, along with charging extra factors, Flying Membership may additionally select to probably double its surcharges. I doubt anybody can be prepared to pay $4,000 in surcharges for a return flight to London (in addition to as much as 310,000 factors in the event that they double the present Virgin factors wanted as effectively), so I am very skeptical the surcharges will improve.
It ought to be pretty straightforward to discover a business-class money fare for lower than $4,000, particularly in case you are prepared to attach, which might make these redemptions absurd.
This system might be progressive by decreasing surcharges on off-peak dates. For instance, a round-trip economy-class flight from New York’s John F. Kennedy Worldwide Airport (JFK) to London’s Heathrow Airport (LHR) within the coronary heart of the winter season could be discovered for as little as $400.
Subsequently, it is unlikely anybody will half with the present 20,000 factors and pay an extra $508 in taxes, charges and surcharges when a money fare requires much less money and no factors.
But when the money cost had been lowered by half, possibly they might.
With money charges this low, it is unlikely Virgin’s planes are full, so tempting members with lowered surcharges might be a win-win for filling the planes and decreasing Flying Membership factors balances.
Associated: How a lot are you able to pack into an hour at Virgin Atlantic’s London Clubhouse?
Factors-only upgrades
I recall checking in to a Virgin Atlantic flight at St. Lucia’s Hewanorra Worldwide Airport (UVF). The passengers on the desk beside me requested if they may use their Virgin factors to improve from premium economic system to enterprise class. They appeared excited to be instructed that seats had been accessible within the Higher Class cabin and that the variety of Virgin factors required was not unreasonable.
The passengers had been about to tug the set off and deal with themselves to the in a single day flight again to London after they had been instructed they might additionally must pay a whole bunch of {dollars} every in surcharges for the improve on high of the tens of 1000’s of factors.
Despondent and annoyed, they refused the improve supply and stormed off to safety, chastising the loyalty program as a “rip-off filled with hidden charges.”
When you have already paid all of the airport charges and taxes of a premium economic system seat and wish to improve one class, would you anticipate to be forking over a whole bunch of {dollars} on high of the factors? Positive, if the flight is departing London and the next Air Passenger Obligation is payable, then it is comprehensible that you’d must pay the extra authorities tax. Nonetheless, an extra surcharge goes straight into the airline’s pocket on high of what might need already been an expensive money ticket.
As an alternative, Virgin may take into account providing points-only upgrades. On condition that Virgin has promised members that each seat will likely be accessible to improve to, providing members the choice to improve with no money required can be a real enchancment to this system.
Associated: Caught in coach with no elite standing? That improve is likely to be cheaper than you suppose
Continued network-wide reductions on award seats
Over the previous few years, Flying Membership has supplied redemption gross sales once in a while, decreasing the factors value of seats throughout its complete community by as a lot as 50%. This has been a terrific method to tempt members with a big steadiness of Virgin factors, like me, to redeem them for decrease charges.
Although this system will reportedly cut back the value of choose seats throughout low-demand durations per its new dynamic pricing mannequin, I hope Virgin will go one step additional and proceed to supply network-wide reductions once in a while.
For instance, I flew in economic system class from New York Metropolis again to my residence in London for simply 5,000 Virgin factors, which saved me greater than $650 on my flight.
Backside line
I might be mendacity if I mentioned I wasn’t nervous in regards to the upcoming modifications to the Flying Membership program, as I am unable to assist however worry the worst. Whereas flights will reportedly begin at 6,000 Virgin factors, this system hasn’t disclosed what the utmost award value will rise to.
Regardless of the advertising and marketing spin, I am not naive sufficient to suppose all of the modifications will likely be optimistic.
With Delta pioneering the dynamic pricing mannequin and SkyMiles now price lower than Virgin factors in our October 2024 valuations, I do hope the worth of Virgin factors does not considerably lower.
Flying Membership has all the time been a singular program for award vacationers. Its large surcharges make its pricing mannequin completely different from that of SkyMiles, which solely expenses taxes and costs. So, I do not see large will increase to each the Virgin factors and the surcharges required to be aggressive within the present loyalty market, the place bank card prospects have a variety of selections by which program to switch their hard-earned factors and miles to.
Hopefully, this system can stay progressive whereas nonetheless being aggressive throughout the market.