Virgin Atlantic Flying Club program changes: What I hope to see as a loyal frequent flyer

1 month ago 11

Last month, Virgin Atlantic's Flying Club loyalty program teased huge changes, specifically a shift to dynamic pricing and more redemption and points-earning opportunities. These changes will commence Oct. 30, but the specifics are still to be announced.

Per a press release, prices for award seats will "vary in line with demand;" therefore, frequent flyers can expect to pay more points for more in-demand flights. While Virgin Atlantic has not yet revealed the increased prices, it has promised that flights from the U.S. to Europe will start at just 6,000 Virgin points, the lowest number of points any program charges for transatlantic flights to Europe.

So, this is surely all good news, right? Well, not necessarily.

Delta Air Lines owns a 49% share of Virgin Atlantic, so it's hard not to assume Delta has at least approved all of the changes, if not created them. So, why does this matter? Delta was one of the first airlines to introduce dynamic pricing, which has created poor consumer redemption rates, such as a Delta One award seat now costing upward of 375,000 Delta SkyMiles.

Realistically, with Delta owning a sizable stake in Virgin Atlantic, what is the best we can hope for to make the program profitable yet competitive?

As a loyal Virgin Atlantic passenger for many years, having flown every aircraft type the carrier operates, I've earned and redeemed Virgin points for as long as I can remember. While Flying Blue has recently become my SkyTeam loyalty program of choice, Virgin Atlantic's Flying Club program has always held some value, despite my grumbles with its high surcharge fees.

With the program undergoing a major shift Oct. 30, here are the changes I hope to see from the Flying Club reinvention.

A reasonable cap on dynamic pricing

Virgin Atlantic's Flying Club program has retained a very reasonable award chart, starting at just 10,000 Virgin points for off-peak economy-class flights between the eastern U.S. and the U.K. While the program imposes very high carrier surcharges, that rate is lower than the rates of competing programs, and availability is usually decent.

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With a shift to dynamic pricing, my biggest worry is how high these award prices might rise for peak-season flights. Since the Flying Club program promises that low-demand economy-class flights will start at just 6,000 Virgin points, I hope that when these flights operate using dynamic pricing, there is a reasonable cap on the number of points it will cost to book the flight, regardless of how high cash prices rise.

While a one-way 155,000-point business-class seat to London would be much higher than current rates, it would still be competitive with other programs over the busy summer period.

The ability to pay surcharges with points

Virgin Atlantic charges some of the highest carrier-imposed surcharges of any airline in the world, adding about $2,000 to the cost of a round-trip business-class redemption across the Atlantic. If I had one wish for the Flying Club program, it would be for a sharp reduction in these surcharges. However, I'm also a realist.

Allowing members to pay these surcharges with Virgin points at a rate of 1 cent per point would improve the program's attractiveness while keeping it competitive. For example, members could redeem an additional 200,000 Virgin points to save the $2,000 in surcharges. However, per our October 2024 valuations, Flying Club points are worth 1.4 cents per point, so you wouldn't necessarily be maximizing your points with this redemption.

But more choice is never a bad thing in my opinion.

Discounts on surcharges during off-peak periods

There have been reports that Flying Club will also dynamically price its surcharges under the new model.

I can't think of any other airline program that does this (they either charge the full surcharge or none at all), and this would be an unusual direction to take.

In theory, this could mean that on peak periods, in addition to charging more points, Flying Club could also choose to potentially double its surcharges. I doubt anyone would be willing to pay $4,000 in surcharges for a return flight to London (as well as up to 310,000 points if they double the current Virgin points needed as well), so I'm very skeptical the surcharges will increase.

It should be fairly easy to find a business-class cash fare for less than $4,000, especially if you are willing to connect, which would make these redemptions absurd.

The program could be innovative by reducing surcharges on off-peak dates. For example, a round-trip economy-class flight from New York's John F. Kennedy International Airport (JFK) to London's Heathrow Airport (LHR) in the heart of the winter season can be found for as little as $400.

Therefore, it's unlikely anyone will part with the current 20,000 points and pay an additional $508 in taxes, fees and surcharges when a cash fare requires less cash and no points.

But if the cash payment were reduced by half, maybe they would.

With cash rates this low, it's unlikely Virgin's planes are full, so tempting members with reduced surcharges could be a win-win for filling the planes and reducing Flying Club points balances.

Points-only upgrades

I recall checking in to a Virgin Atlantic flight at St. Lucia's Hewanorra International Airport (UVF). The passengers at the desk beside me asked if they could use their Virgin points to upgrade from premium economy to business class. They appeared excited to be told that seats were available in the Upper Class cabin and that the number of Virgin points required was not unreasonable.

The passengers were about to pull the trigger and treat themselves to the overnight flight back to London when they were told they would also need to pay hundreds of dollars each in surcharges for the upgrade on top of the tens of thousands of points.

Despondent and frustrated, they refused the upgrade offer and stormed off to security, chastising the loyalty program as a "scam full of hidden fees."

If you have already paid all the airport fees and taxes of a premium economy seat and want to upgrade one class, would you expect to be forking over hundreds of dollars on top of the points? Sure, if the flight is departing London and a higher Air Passenger Duty is payable, then it's understandable that you would need to pay the additional government tax. However, an additional surcharge goes straight into the airline's pocket on top of what might have already been a pricey cash ticket.

Instead, Virgin could consider offering points-only upgrades. Given that Virgin has promised members that every seat will be available to upgrade to, offering members the option to upgrade with no cash required would be a genuine improvement to the program.

Continued network-wide discounts on award seats

Over the past few years, Flying Club has offered redemption sales from time to time, reducing the points cost of seats across its entire network by as much as 50%. This has been a terrific way to tempt members with a large balance of Virgin points, like me, to redeem them for lower rates.

Though the program will reportedly reduce the price of select seats during low-demand periods per its new dynamic pricing model, I hope Virgin will go one step further and continue to offer network-wide discounts from time to time.

For example, I flew in economy class from New York City back to my home in London for just 5,000 Virgin points, which saved me more than $650 on my flight.

Bottom line

I'd be lying if I said I wasn't nervous about the upcoming changes to the Flying Club program, as I can't help but fear the worst. While flights will reportedly start at 6,000 Virgin points, the program hasn't disclosed what the maximum award price will rise to.

Despite the marketing spin, I'm not naive enough to think all the changes will be positive.

With Delta pioneering the dynamic pricing model and SkyMiles now worth less than Virgin points in our October 2024 valuations, I do hope the value of Virgin points doesn't significantly decrease.

Flying Club has always been a unique program for award travelers. Its massive surcharges make its pricing model different from that of SkyMiles, which only charges taxes and fees. So, I don't see massive increases to both the Virgin points and the surcharges required to be competitive in the current loyalty market, where credit card customers have a wide range of choices in which program to transfer their hard-earned points and miles to.

Hopefully, the program can remain innovative while still being competitive within the market.

Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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