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.
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.
And 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 (January 2021)
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, one has a bonus of 15,000 Points):
You can also earn Virgin Points from various American Express cards – and these have sign-up bonuses too.
(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.)