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I chat with Andrew Swaffield and Oli Byers about Virgin Group Loyalty Company / Virgin Red

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I broke off from my holiday yesterday to chat, separately, with Oli Byers, who runs Virgin Flying Club, and Andrew Swaffield, who runs the new Virgin Group Loyalty Company (VGLC), trading as Virgin Red.

In my article yesterday (click) we looked at Virgin’s announcement that it was launching Virgin Group Loyalty Company / Virgin Red.  This is a new vehicle which will operate loyalty programmes for multiple Virgin-branded businesses, rewarding customers with Virgin Flying Club miles.

I wanted some clarification about how the new Virgin Group Loyalty Company would work and how Virgin Flying Club would fit into it.

Virgin Group Loyalty Company how it works

To be simplistic, Virgin is creating a copy of the Avios structure that IAG is currently breaking up.

Virgin Flying Club will remain a business unit inside Virgin Atlantic (in the same way that British Airways Executive Club is a business unit inside British Airways)

The airline will retain control over tier points and tier benefits, as well as how many miles you earn from a flight and how many miles you need for a flight redemption – although there will, I assume, be a cash transfer between the airline and VGLC each time

Your Flying Club miles will become the legal property of Virgin Group Loyalty Company / Virgin Red (in the same way that the Avios in your BAEC account are the legal property of Avios Group Limited)

In terms of how you will be able to earn and spend miles:

People will be able to have a miles-earning loyalty account with VGLC / Virgin Red without having to join Flying Club (in the same way you could have an avios.com account without joining BAEC) and vice versa

It will be possible to join both programmes using separate accounts ….

….. but existing Flying Club members will be able to log in to the Virgin Red website using their Flying Club log-in details and earn and spend from their Flying Club balance

What wasn’t clear was what would happen to existing Flying Club promotions, such as the Virgin Money offers.  Will they only be offered to VGLC members in the future, or will offers appear on both the Flying Club and VGLC websites?

Similarly, I wasn’t told whether non-flight redemptions would move exclusively to Virgin Red.

Rather like Avios, there will be a crunch point caused by the fact that Virgin Flying Club has members globally whilst, at least initially, Virgin Group Loyalty Company / Virgin Red will be focused on the UK.  It won’t be possible to move all partner earning and redeeming away from Flying Club.  In the same way, avios.com was just for UK residents whilst anyone could join British Airways Executive Club.

Clarification on ownership

It turns out that the Air France KLM investment in Virgin Atlantic has not yet been completed.  This means that, legally, moving the existing miles liability from Virgin Atlantic into Virgin Group Loyalty Company is very easy.  Both companies have, at present, identical shareholders – 51% Virgin Group and 49% Delta Air Lines.  Air France KLM has approved the move.

I assume Virgin’s lenders will have had to approve this change, as it impacts the cashflow of the airline. Instead of simply creating a balance sheet reserve for miles issued after a flight, it now needs to make a payment to VGLC.

Going forward, of course, there will be different shareholders.  The airline will be owned 49% Delta, 31% Air France KLM and 20% Virgin Group whilst the loyalty company will be owned 49% Delta, 51% Virgin Group.  There will clearly be an incentive at Virgin Group for VGLC to extract as much money from the airline as possible, and an incentive at Air France KLM to resist.  Delta wins either way.

From my chats with both Oli and Andrew, they appear quietly confident about the new venture.  They don’t have the answer to every question yet but the new scheme will not be launching until 2019.

If nothing else, it should be good news for Head for Points because there will be a lot of new people collecting Flying Club miles and wanting to know how to spend them.

You can find out more about Virgin Group Loyalty Company / Virgin Red on the Virgin Atlantic site here.

How to earn Virgin Points from UK credit cards

How to earn Virgin Points from UK credit cards (April 2024)

As a reminder, there are various ways of earning Virgin Points from UK credit cards.  Many cards also have generous sign-up bonuses.

You can choose from two official Virgin Atlantic credit cards (apply here, the Reward+ card has a bonus of 18,000 Virgin Points and the free card has a bonus of 3,000 Virgin Points):

Virgin Atlantic Reward+ Mastercard

18,000 bonus points and 1.5 points for every £1 you spend Read our full review

Virgin Atlantic Reward Mastercard

3,000 bonus points, no fee and 1 point for every £1 you spend Read our full review

You can also earn Virgin Points from various American Express cards – and these have sign-up bonuses too.

American Express Preferred Rewards Gold is FREE for a year and comes with 20,000 Membership Rewards points, which convert into 20,000 Virgin Points.

American Express Preferred Rewards Gold

Your best beginner’s card – 20,000 points, FREE for a year & four airport lounge passes Read our full review

The Platinum Card from American Express comes with 40,000 Membership Rewards points, which convert into 40,000 Virgin Points.

The Platinum Card from American Express

40,000 bonus points and a huge range of valuable benefits – for a fee Read our full review

Small business owners should consider the two American Express Business cards. Points convert at 1:1 into Virgin Points.

American Express Business Platinum

40,000 points sign-up bonus and an annual £200 Amex Travel credit Read our full review

American Express Business Gold

20,000 points sign-up bonus and FREE for a year Read our full review

Click here to read our detailed summary of all UK credit cards which earn Virgin Points. 

(Want to earn more Virgin Points?  Click here to see our recent articles on Virgin Atlantic and Flying Club and click here for our home page with the latest news on earning and spending other airline and hotel points.)

Category

Virgin Atlantic and Flying Club

Comments (52)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • Marcw says:
    22 Aug22 August 11:45

    Umm… I’m sorry but the only exclusive thing is that they don’t “know” yet how the program will look like. Im sure they know, but they’re not disclosing it. But I guess people who search “Virgin Flying Club changes” are more likely to click on an “exclusive” link than on any other link.

    • Marcw says:
      22 Aug22 August 11:50

      However i like Robs “behind the scenes” approach of how frequent flier programs “work”. I wouldn’t have known before reading HfP, but slowly I “get it”. I’m not a banker… just an immunologist with a great interest in this hobby.

      • Mark says:
        22 Aug22 August 13:04

        me too! didn’t think there would be any immunologist point geeks lol.

    • Lady London says:
      22 Aug22 August 13:19

      No, it’s even worse, they don’t know either yet themselves I would say.

      But what they do know is what they’ve done so far. Some balance sheet twiddles. That’s all we’ve got to think about right now.

      I’m still out.

  • vlcnc says:
    22 Aug22 August 13:41

    I am still not convinced this will be good for the consumer especially with Delta and their revenue based system involved as other people have said.

    I think for most people in the UK the KLM link would be the most useful, but as they’re not involved I can’t see how there would be a favourable relationship here. It’s a shame, as I thoroughly enjoy KLM’s understated product which is made great by their crew which even living in London I would be happy to use with a stop if it was rewarding enough – compared to the utter miserable sods of BA!

    • vlcnc says:
      22 Aug22 August 13:43

      (Also the idea of competition with Avios is laughable given Virgins teeny route network with scant routes eastwards)

  • James says:
    22 Aug22 August 15:17

    Still no news on devaluation?

    • Rob says:
      22 Aug22 August 15:59

      As I said earlier, a pile of people earning 50 miles a month from their Virgin Mobile contract (or whatever it earns) isn’t going to devalue anything. In fact, I bet the expiry rate will be far higher than usual and VGLC makes a fortune in ‘breakage’.

      • Alan says:
        23 Aug23 August 08:31

        Higher expiry rate? Surely with more ways to earn eth miles they will get topped up regularly (if not in large quantities) thus keeping more accounts “Live”. Unless, of course, they change the expiry rules.

        I know of a number of people that have had VMs expire as they only fly on that carrier every 4 or 5 years so don’t bother to keep them live. A number fo these type of people would probably keep their accounts live by aquring points where they never used to (such as in your example of regular monthly feed by mobile contract).

        • Rob says:
          23 Aug23 August 08:48

          Let’s imagine Virgin Media has 10m customers (made up number) and they are forcibly opted in to VGLC. 95% will not be Flying Club members and will only earn a tiny number of miles per month.

        • Alan says:
          23 Aug23 August 12:30

          Don’t dispute that they won’t earn many. However, they will earn them regularly meaning that all of their miles will remain”live” rather than getting “Broken”.

          I’m not suggesting that all of these VM customers will be booking Upper Class flights with their earned miles, just that the number of miles in circulation will rise and fewer of them will get broken – unless they change the criteria for mile expiry.

        • Fenny says:
          23 Aug23 August 21:37

          I’m happy enough that any miles I earn from paying Ma’s VM phone bill will go into the pile with all the ones I earn from shopping in Waitrose every day waiting for an opportunity to fly somewhere I want to go with VA while the US is off my travel list.

  • ADS says:
    23 Aug23 August 00:21

    Page 78 of Virgin’s Annual Report – the “Unredeemed revenue: customer loyalty programme” was £148.2m at the end of 2017 – up from £146.9m at the end of 2016.
    “The fair value of the awards is reduced to take into account the proportion of miles that
    are expected to expire (breakage) based on the results of actuarial valuation.”

    Assuming a figure of £150m – the transaction is VAA pays VGLC £150m in cash, and VGLC takes over the liability to honour the stock of Flying Club miles (e.g. 375m miles if they are using a figure of 0.4p per mile).

    And going forward, each time VGLC awards a FC mile due to a flight on VAA – VAA pays VGLC 0.4p per mile (or whatever the figure is).
    And each time FC miles are redeemed on a VAA flight – VGLC pays VAA 0.5p per mile redeemed (or whatever the figure is).

    Lets just hope that VGLC and VAA don’t have a falling out (like Virgin Media recently had with UKTV) – and redemptions get suspended !

  • ADS says:
    23 Aug23 August 00:30

    Rob – did you ask the Virgin guys:

    why are you doing this ?
    did KLM/AF require it ?
    why do you think you can generate value from a separate entity when BA/IAG have just admitted defeat ?
    why do you think this will work when Nectar hasn’t really taken off as planned ?
    why are you separating your loyalty program when the market is moving in the opposite direction – see Air Canada ?

    • Rob says:
      23 Aug23 August 08:56

      Andrew and I have agreed to have a session when I’m back in London where we will be going through all this.

  • Nigel Williams says:
    24 Aug24 August 10:05

    A perfect world for me would be the following

    – Virgin Rewards aims to become the “Clubcard” of miles programs
    – All mainstream Virgin Products (Media, Money, Mobile etc) regularly begin to offer miles
    – KLM / AirFrance becomes a viable option to use miles for short haul flights, redeemed through a common portal.

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