Is THIS the strategy behind the Virgin Atlantic changes?

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• Will says:

  2 Oct2 October 05:44

  And this is paid for by the shops/services that pay fees to the credit card providers? All of which is highly regulated in uk and has killed our points world (eg amex bonuses, lack of decent visa/mastercard options)

  • Jake says:

    2 Oct2 October 06:22

    Yes but also more likely shops and services in the US raise prices to account for the large credit card cut and therefore those who can’t benefit from cash back/ rewards etc (I.e. those without a credit card so likely not so well off) actually fund those that can.

    Given the cut can be 2-3% this has a substantial negative impact to people on the American bread line

    • Boi says:

      2 Oct2 October 06:33

      I don’t find shops here more expensive though! When we moved 4years ago I did things are cheaper here and our points accumulation is much faster and higher

      • Mouse says:

        2 Oct2 October 06:47

        Yes but the point is they would be cheaper still if the credit card fees were lower

        • Jake says:

          2 Oct2 October 06:54

          Yeah. It’s essentially a 3% bump on to everything which you recoup if you have a credit card in some form of benefit.

          If you don’t have a credit score of note, thus not credit card you just pay the 3% with no return. Given those without a good credit score tend to be less well off they are disproportionately impacted.

      • Rhys says:

        2 Oct2 October 09:24

        Grocery shopping in the States is MUCH more expensive than the UK, I find!

        • Definitas says:

          2 Oct2 October 10:02

          We visit family in the US and stay fro around a month. We find that the US cost of living is MASSIVELY higher right across the board than it is here. Petrol is cheaper but basic foodstuffs cost significantly more and the cost of eating out (plus the addition of the ubiquitous 18-22% tip) has increased most of all.

        • r* says:

          2 Oct2 October 17:10

          $8 for a bag of lays is a comedy moment.

• Drew Post says:

  2 Oct2 October 06:29

  Given the momentum behind the Credit Card Competition Act that’s currently up for debate in the US, this may be a short lived strategy as it would have similar impacts to the legislation in place here in the UK.

  https://www.nerdwallet.com/article/credit-cards/what-to-expect-if-the-credit-card-competition-act-passes

  • BA Flyer IHG Stayer says:

    2 Oct2 October 08:47

    Every year dozens, if not hundreds, of bills get proposed in Congress.

    And every year very few get a debate (let alone a vote) and even fewer get passed.

    And even if they pass in one chamber they often just die in the other.

    They can’t even pass Appropriations (spending bills) of the time,

  • Rhys says:

    2 Oct2 October 09:24

    You can bet your top dollar that all the banks and credit card providers will be lobbying HARD against this 🙂

    • CarpalTravel says:

      2 Oct2 October 10:28

      “Lobbying”….

      • CarpalTravel says:

        2 Oct2 October 10:30

        That isn’t aimed at you BTW, Rhys – I am sure you are right. I’m rolling my eyes at the activities that word has come to represent, and the acceptance of it.

• John says:

  2 Oct2 October 06:29

  There’s two options when running a loyalty scheme.

  One reward loyalty or two make money.

  Making money is easy in principle sell points for more than you have to pay out when they are redeemed. The challenge is having enough redemption opportunities to encourage those people who buy points to agree to your prices.

  This doesn’t help the leisure traveller who takes one flight a year or the aspirational non-flyer who has a dream of flying and builds up their balance.

  It’s simple economics and if you’re willing to lose your ‘loyalty’ base for a cash injection then its a logical move.

  The problem comes when everyone shifts to the same model and you’ve lost your ‘loyalty’ customers because they’ve moved to the alternative.

  • Lux says:

    2 Oct2 October 13:04

    This is an astute comment. I did come here to say Virgin has redefined the meaning of ‘loyalty’ by looking to speak to the most price (points) conscious of travellers if Rob is right. Clearly it disincentives some uk travellers, and many of us, but make more money for the airline.

    I have enough points and a voucher for ac west coast redemption that I will make this week. Then I expect I’ll refocus on BA again.

  • PH says:

    4 Oct4 October 23:25

    The loyalty schemes also function as elaborate hidden discounting schemes, selling premium seats at discount in a way that is inaccessible to / too fiddly for corporate and cash rich travellers who are prepared to pay more

• PeteM says:

  2 Oct2 October 06:47

  Interesting! I read that statement as meaning they want many more people to spend their miles instead of hoarding them because there’s no availability.

  • BJ says:

    2 Oct2 October 07:34

    The interview yesterday was full of waffle, spinning it for the audience, and that’s fair enough as that’s the guy’s job. The bottom line is that the frequency and scale of revenue and rewards sales across their entire network indicates a desperately needs to fill seats and maximise revenue. It’s that simple, and dynamic pricing is the best way of doing it. The interview tells us nothing Virgin don’t want to say, and let’s them spin the yarn they wish. Blogs like HfP like it because it looks good in print and presumably increases page views as a result but at the end of the day they rarely divulge much if interest and are best not overanalysed. Wait for the T&C in black and white.

  • Super Secret Stuff says:

    2 Oct2 October 08:24

    That’s how I initially read it

• NigelthePensioner says:

  2 Oct2 October 06:49

  How will Virgin double the number of their issued points being used on reward flights was the question……Simple – just double the points required for a reward flight ✈️!
  Virgin seem only to still be in business as they are the only airline flying from the UK to niche (obscure) cities in Africa and Asia! They need to compete more and then will have destinations that the majority want to travel to and trading in of points will follow……
  Just a thought from a very seasoned traveller!

  • Ken says:

    2 Oct2 October 07:07

    While I’m impressed with you dislike of Virgin , do you really think they are only in business because they fly to Lagos & Lahore ?

  • PeteM says:

    2 Oct2 October 07:08

    Ummm, are you sure about this Nigel?

    • ed_fly says:

      2 Oct2 October 08:00

      I’m not sure that being ‘avery seasoned traveller’ qualifies you to understand the economics of running an airline like virgin. But send in your cv.

• Geek says:

  2 Oct2 October 07:06

  This seems to be exactly it. The other issue seems to be that, struggling with loads, virgin is is effectively restricting highly discounted seats within high demands periods (ie school holidays) to maximise revenue (ie, sounds like less reduced saver seats with no premium cabin guarantee on these), unlike BA would promise 12 or whatever Avios seats on every flight.

  Not sure it bodes well for the Avios programme unless BA makes some amendments to the part pay with Avios product just for the USA martket.

• BJ says:

  2 Oct2 October 07:11

  No, this is not it unless they plan to aggressively increase the number if transfer partners and the number and value of transfer bonuses as suggested in your article. If so, that will still only be a small bit-part in their strategy. Virgin FC already partners with Chase and Amex at 1:1 standard conversion rates in the USA, and on top of that there are the Marriott Bonvoy cards also facilitating transfers. Furthermore, they all offer occasional transfer bonuses already. All these options also provide completion for transfer and the harsh reality is Virgin cannot compete effectively with the likes if BA, Luftty, AF/KLM, and the major American carriers in this arena. I’m not saying it is not part of the strategy, only that it is a bit-part at best and unlikely to work any wonders for Virgin due to their limited network and inability to compete with the big boys.

  The strategy is blatantly obvious and it’s simple, there is no point in over-analysing it. Virgin simply wants to maximise revenue at lucrative times on lucrative routes when it can, and fill empty seats with reward seats on all other routes at all other times. Dynamic pricing is the best way airlines can serve their own interests. If they can ‘con’ the naive Joe Bloggs into daft redemptions inherent within dynamic pricing then all the better for Virgin.

  • Rob says:

    2 Oct2 October 07:32

    Perhaps we know something you don’t …..!

    • BJ says:

      2 Oct2 October 07:37

      Perhaps you should say it then Rob … we’re all waiting 🙂

      • BJ says:

        2 Oct2 October 07:48

        Would Virgin FC and SAS be moving towards joining FlyingBlue by any chance … is that the underlying strategy?

        • NorskSaint says:

          3 Oct3 October 19:17

          I believe for SAS its already on the cards… eventually. There is no secret of that desire and believe its been written into some of the Chapter 11 documents in the US

  • Thywillbedone says:

    2 Oct2 October 08:14

    “daft redemptions” …let he who has not sinned cast the first stone!! (I think we’ve all been guilty of this at one time or other)

    • BJ says:

      2 Oct2 October 08:49

      Yes, me included, and more than once even when I’ve known better. However, those who do not seriously follow the loyalty game will be more susceptible and that group I imagine is much greater.

  • Thywillbedone says:

    2 Oct2 October 08:25

    ps: ‘blatantly obvious’ is tautologous …either ‘blatant’ or ‘obvious’ would have done

    • RussellH says:

      2 Oct2 October 11:20

      Not if you refer to the Concise Oxford Dictionary.
      Blatant = Noisy, vulgarly clamorous; flagrant, palpable.
      So, blatantly is the adverbial form of the above.

      In any case, ‘blatantly obvious’ is a frequently used combination.

      • Thywillbedone says:

        2 Oct2 October 17:33

        Wouldn’t stoop to debate someone who chooses to use the concise format of a dictionary …

• Flyoff says:

  2 Oct2 October 07:22

  This potential strategy will depend on whether the fees charged are affordable compared to paying just cash.

  • Aardvark says:

    2 Oct2 October 08:22

    I agree, the bottom line is that if i can fly (upper out/upper back/premium back) using a voucher for around the same price of an economy cash fare then it is still a no brainer to do it. We are retired and are flexible (within reason) on dates and we book 11 months in advance at the moment due to the availability. During November I will be able to see if the existing saving has been reduced, even it reduces it is still a significant saving – lets see!

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