EXCLUSIVE: I chat with Oli Byers and Andrew Swaffield about the launch of Virgin Group Loyalty Company

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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).

In my article yesterday (click) we looked at Virgin’s announcement that it was launching Virgin Group Loyalty Company.  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 (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 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 VGLC 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 VGLC.

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 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 on the Virgin Atlantic site here.

(Want to earn more Virgin Flying Club miles?  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.)

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  1. I wonder whether there is any likelihood of convertibility between delta skymiles and virgin miles being introduced (or some other sort of closer integration)?

  2. Mr(s) Entitled says:

    If Air France KLM are not yet owners of Virgin Atlantic it is not unreasonable to assume that they may yet still become stakeholders in VGLC at the appropriate time. While it may never happened it would be very odd to be a stakeholder in VGLC first.

  3. Need additional good value spending options…

    • Lady London says:

      +1. I’m still out.

      What can I transfer my smallish pot of Virgin miles to ?
      I could just about scrape up a flight with the amount of miles I’ve got. But Virgin extra charges on award flights are virgin on the ridiculous.

      Can I cash out through anything like LHR Rewards?

      • LL – Hilton is a good for a VS exit strategy?

        • Lady London says:

          Thank you @TripRep I will look into how it would work out for Hilton.

          LHR Rewards or Virgin Trains vouchers would be useable quicker though if Virgin could work to them. I’m thinking of moving a chunk of hotel business to HIlton… giving IHG one last chance on their next promo,

  4. Oh Matron! says:

    “Instead of simply creating a balance sheet reserve for miles issued after a flight, it now needs to make a payment to VGLC”

    True, but it also removes the liability of holding onto those miles. As there is an intrinsic value to the airline, NOT having them on the books would make things look a lot better.

    i’m struggling with this. There has to be a good reason for Virgin to be doing this. it can’t just be for the good of the customer…

  5. Is it just me, or does this exclusive chat not reveal anything not already known/obvious?

    • Stuart P says:

      It’s not just you. Most of this is of more interest to an equity research analyst than a frequent flyer.

      • It’s not that it may not be interesting to a frequent flier, it’s just there’s literally nothing there I didn’t already know (or perhaps only thought I knew but was only assuming?).

        Didn’t mean to sound too snippy, but I thought perhaps I missed something given it’s trailed with “EXCLUSIVE”!

        • It is what you assumed. I know what you knew ….

        • Fair enough. It’s all incredibly obvious and not remotely useful information though!

          • It would have been had they put it in the original news release! That’s why there are 10 articles online saying ‘Virgin Flying Club is being sold’, when it isn’t.

      • A large chunk of our readership is in investment banking, they like it. Another large chunk works in the loyalty business and they find it useful.

        Generally if you read this stuff everyday then you are going to have a deeper interest in how programmes work behind the scenes than the average member.

        • I need another job to fit into your target audience

        • Charlie T. says:

          I like this sort of stuff (but then I am a banker) although perhaps I was hoping for more when the “EXCLUSIVE” dropped into my inbox this morning. Anyways, keep up the good work Rob.

        • Me too. I’m just a lawyer who can’t do arithmetic.

        • Sorry that was to Darren.

  6. Not just anyone can sign up to BAEC, for example Australians are still excluded!

    • That was changed when BA and Qantas scrapped their JV.

      • I’m not sure it’s been implemented as I still proxy for some friends who are unable to signup for a membership with an AU address…..

  7. 4 absolutely useless FAQs on the VS website that say absolutely nothing about what is going to happen.

    And they wonder why people start to worry about devaluations!

    • The fact that Andrew Swaffield is behind this new venture would make me ultra worried about him using precisely the same devaluation strategies that he masterminded during his time at AirMiles including in particular abolishing the right to make one way bookings on the AIr Miles scheme when BA Executive Club was set up and an unacceptably poor rate to convert Air Miles over to BA Exec Club when that divorce (or as it turned out separation of 10 or more years) happened. That is not to mention Swaffield also being responsible for charges to book redemption seats with Air Miles being introduced and then massively increased (especially Long Haul where there was quite unacceptably no Reward Saver concept) and also flip flopping the scheme between a set known mileage per route over to variable date based Avios required charging and then back again to fixed number of Avios per route charging within a couple of years.

      Also when I persisted with my complaint about there being certain routes to Spain in those days that there was never any Avios availability on I was threatened by Mr Swaffield’s PA (a dragon of the most severe kind) with my account being closed down and my Air Miles basically confiscated.

      So I have no confidence at all in any miles scheme that is clearly going to be run on the same cynical basis that we have seen over the years with AirMiles/Avios.

      • Bitter much?

        • …and breathe.

        • The point is this guy (Swaffield) has form as a false pricing merchant of the very worst kind who has before taken advantage of the fact that wiping out the value of Air Miles is not legally seen the same way as a company helping itself to your bank account whenever they feel like they need some more money.

          Any complaint will be met with it was only a loyalty scheme and a claim you didn’t have to pay anything for the points (not actually true given that Avios are now regularly being sold for cash by BA itself.

          Now he shows up at Virgin no doubt hoping to repeat the same tricks……………….

        • Lady London says:

          Seems fair comment to me if that’s what’s happened.

          One of the reasons having the internet and being able to share things on blogs like this has helped so much. Who knew the people running loyalty schemes are doing it for their reasons and not yours and that they sometimes do naughty skulky things. The 3-card find the lady trick Air Canada has just pulled off with the buyback of Aimia (that they originally sold for a fat sum) being one very high level example.

      • Seems fair comment to me as well. Such input is always good.

  8. It’s also good news in the sense that Avios is getting some better organised competition. Maybe we’ll start seeing more earning opportunities 🙂

    • I guess Avios has no real competitor in the UK… I’ve spent about 75k Avios in the last 3 months on short haul flights. My VFC pool hasn’t changed in the last 3 years…

    • Lady London says:

      Don’t hold your breath on that one.

      They will have to offer something pretty extraordinary to get me interested.
      I’d be quite curious to know who the new Virgin Miles entity thinks is the customer base that they’re aiming for.

  9. 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.

    • 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.

    • Lady London says:

      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.

  10. 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!

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

  11. Still no news on devaluation?

    • 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’.

      • 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).

        • 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.

        • 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.

        • 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.

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