Hi Frugalistas! The email came this week. Virgin Australia is changing its Velocity frequent flyer program. Making it harder to attain and retain that coveted Gold and Platinum membership status. Then more emails. This time from KLM and Air France, advertising their cheap Business Class airfares to Europe for next year. About $1500-$2000 cheaper than I could buy on Virgin Australia or its partners. It got me thinking……What does my Velocity membership actually buy me? What am I going to lose when I can no longer retain my Platinum status? (because I honestly don’t think I can now). And most importantly for Frugalistas around the world, is airline loyalty worth it? Is airline loyalty worth it
What does airline loyalty buy you?
Airlines work hard to emphasise the value of their programs. Fly further sooner, free flights, upgrades, special events and lounge access, it’s all there for loyal customers.
But, and it’s a big but, Is airline loyalty worth it
Airline loyalty programs are also highly profitable.
Yes, loyalty programs make money for the airlines. Do they make money (or save money) for you?
My Virgin Velocity Platinum status does get me quite a bit on paper.
I get access to Virgin’s The Lounge at Australian domestic airports where they have them, and to partner lounges overseas if I am flying Economy. I can also invite a guest and a child under 18 meaning MissG, Mr Frugalfirstclass and I can all enjoy lounge access when we travel within Australia. But I have a Platinum American Express Card – which gives me Virgin lounge access anyway. And internationally, I’m flying Business, so get lounge access as part of my ticket (or I can use my free Priority Pass membership that I also get as part of my American Express card annual fee).
We also get the privilege of not queuing. When we are traveling from Sydney airport we use the Valet check in service, so we never queue for check in or security. And of course we get priority boarding regardless of our class of travel.
On the plane we get access to seats in the front of the Economy cabin. Which is great if you get the front row, but not really of any material value if you get the second row.
Then of course, there’s all those priority things that I never use, like phone lines, priority waitlisting for full flights, and guaranteed frequent flyer flight redemptions – if I have enough points. Oh, and priority luggage handling and extra luggage allowances – but of course, I never check luggage. I can also get status for hotel programs I never use, so I don’t get the value of bonus points at Hilton Hotels for example.
I can get upgraded to Business Class on domestic and short haul international flights as long as I’m not traveling on the cheapest ticket (which I often am) and there is a Business Rewards seat available. And I did win the “upgrade lottery” once and got upgraded to First Class from Abu Dhabi, which I do admit was very nice and a lovely surprise. But it was once – it’s like winning lotto!
On paper, the big value for me is the bonus mileage points I get when I fly. As a Platinum member I get a generous 100% points bonus when I fly domestically, and a smaller bonus on Etihad internationally. It is very generous, but is it really worth it?
To redeem a Business Class airfare to Europe I need a minimum of about 180 000 points for a one way seat. And I need to be able to lock in my dates 11 months in advance, so I can book my ticket as soon as the redemption seats become available – otherwise the seats become very expensive, very quickly (I’m talking 500-600 000 points one way expensive).
As a base grade Velocity member I earn approximately 27 000 points for a one way Business Class ticket to Europe, with another 5 000 bonus points for my Platinum status. Therefore the return flight earning for a Platinum member is about 66 000 points and about 54 000 points for a base tier (red) member.
Or, looking it another way, a Platinum member needs to make about five return flights to Europe in Business Class to redeem one return flight (assuming you can get your dates and destination), and a base member needs to take closer to seven return flights to redeem one.
Buying those flights to earn the “free” flight does have a cost of course. For us in Australia a Business Class trip to Europe on a Virgin affiliated flight is around $7000. Sometimes it’s cheaper, sometimes it’s more – depending on the destination and when you look to book. So even with Platinum status it costs an eye watering $35 000 to earn enough points to redeem a free flight worth about $7 000.
It actually looks OK, until you start to look at those cheaper option on other airlines………….
I can also buy a Business Class flight to Europe on an Air France ticket (using airlines such as Qantas, Cathay, and yes, even Etihad as well as Air France) as well as other quality airlines for as little as $5 200. So let’s work out what is cheaper…….
It costs $35 000 as a Platinum member to save $7 000 and to earn the points for the redemption I need to take five flights. Five return flights, booked on a discounted ticket on another airline is $26 000. Hhhhmmm, far less than my Platinum membership “free” ticket is going to cost. And of course, I can earn points on whatever other airline I choose.
Other ways to earn points to make your redemption cheaper
Of course, just to make it more difficult, there are plenty of other ways to earn points even if you are not flying, via credit card points, using the loyalty program online shops and the myriad of other offers that the airline frequent flyer programs and credit card companies will tempt you with.
Every point you earn without flying, actually brings the cost of that redemption flight down, and that is where the true value of your mileage program lies.
So, is airline loyalty worth it?
The point of this post is not to brag about my ability to fly Business Class, or to complain about changes to the Virgin Australia program. The point is to demonstrate that we should all be reviewing and reassessing the value of our programs – regardless of where we live, the loyalty program we belong to and where we sit on the plane.
Don’t assume that getting “free” flights is the cheapest way to fly. Because often it is not.
So, this is my strategy from now on. Check it out, and see if doing something similar will work for you:
I’ll always book Virgin Australia for domestic flights, because I like them better than Qantas, and I have lounge access via my American Express card.
When it comes to booking international I’m going to check the Virgin affiliated options first. But then I’m going to use a comparison site such as Skyscanner to compare and check other options. I’m going to take into account comfort and safety, cost, flight length and the number of stops and length of those stops. I’ll use the Virgin affiliated option if it makes sense to. But I’m going to book the cheapest option that makes sense – like we did when we flew Scoot Business Class earlier this year.
I’m going to join the loyalty program of every airline I do fly (or one of their affiliated airline programs, such as One World, Star Alliance or Sky Team), so I make sure I earn points every time I fly. I’ll keep my American Express points sitting on my card until I decide I want to redeem a flight – then I’ll transfer them to the airline I want to redeem from. Or I’ll use the points to pay for airline tickets booked through the American Express travel service and reduce my cost even more.Is airline loyalty worth it
I’m not being critical of Virgin Australia, or any other airline and its loyalty program for that matter. My point is that maybe, just maybe, there are other ways to enjoy the benefits of airline travel. Maybe it’s actually cheaper to forget about airline loyalty, and maybe airline loyalty is just not always worth it.
What do you think? Is your airline loyalty program worth it?