EXCLUSIVE | Australians will soon be able to use their frequent flyer points to buy petrol rather than airplane tickets under a initiative between Virgin Australia and BP.
Members of Virgin's Velocity Frequent Flyer program can already earn points at the pump, at a rate of two Velocity points per litre.
But from Monday July 11 it'll work the other way, too – with those points used to buy fuel and other items sold at BP service stations including drinks and snacks.
Under the ‘Pay with Points’ scheme, Velocity members will be able to swipe their frequent flyer card and use points to redeem between $10 and $60 off their fuel bill, as well as in-store purchases at participating BP service stations.
The 'exchange rate' will see a baseline of 1,667 Velocity Points equivalent to $10.
It's an innovative twist on the usual frequent flyer formula, whereby points are widely earned through flying, using credit cards or shopping with selected retail partners – but spending those points is typically restricted to the airline's own eco-system of buying free seats, inflight upgrades or selected products at an online store.
The scheme will be aimed at Australians with relatively few frequent flyer points, as well as those with higher points balances but little opportunity to trade those points on a free seat.
“Velocity is committed to rewarding our members on their everyday expenditure, and this initiative with BP takes that one step further," explains Velocity Frequent Flyer CEO Karl Schuster.
"We know some members drive much more than they fly, so this gives them an alternative way to use their Points that will ease the pressure on their wallet."
Frequent flyer points as virtual currency
While frequent flyer points are often considered a de facto currency, Virgin's play effectively turns Velocity points into a virtual currency which can be both earned and spent in the real world.
The purchasing power of frequent flyer points typically ranges from half a cent to 7 cents each, depending on how they're being used.
Items sold through Virgin's Velocity Rewards Store sit at the lower side of the scale, with department store gift cards pegged at 18,000 points for a $100 voucher – which equates to 0.55c per point.
When used for buying petrol at a BP service station, the value ticks up to 0.6 cents per point.
However, a business class ticket from Sydney to Perth or Los Angeles lands over 10 times the value, at 5-7c per point.
Virgin Australia has seen a surge in Velocity Frequent Flyer members since launching its partnership with BP in April 2015, with the loyalty scheme now topping six million members.
Velocity experienced a peak flow exceeding 40,000 new members per week following the launch of the 'points for petrol' partnership, which has reportedly also increased BP's share of the overall market.
While Qantas has over 11 million frequent flyers on its books the Flying Kangaroo has no tie-up with any petrol outlets, following the axing of the Qantas-Caltex-Woolworths alliance at the end of 2015.
Australia's third major petrol brand, Shell, is tied to the Coles Flybuys rewards program.
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