Is Virgin Australia's invitation-only The Club set to close its doors?

As Virgin goes mid-market, its competitor to the elite Qantas Chairman's Lounge seems oddly out of place.

By David Flynn, June 19 2020
Is Virgin Australia's invitation-only The Club set to close its doors?

Virgin Australia's secret invitation-only The Club could be grounded when the rebooted Virgin 2.0 takes to the skies in the coming months.

Created by former Virgin Australia CEO John Borghetti as his answer to the Qantas Chairman's Lounge –  which, ironically, Borghetti oversaw during his time as Qantas' Executive General Manager – The Club is an elite program which Virgin uses to woo and wield influence over politicians, upper ranks of Australia's largest companies, deal-makers and power-brokers, A-list celebrities and others who are very well-connected.

Membership to The Club is granted only by the airline CEO, lasts for two years and includes The Club membership for a spouse or partner as well as Velocity Platinum status for a member's nominated personal assistant.

Even the membership card – finished in a dark matte, bearing only Virgin's 'Flying Maiden' graphic and the words 'By Invitation' – is deliberately discreet.

But it's the passport to a cache of VIP perks such as limousine transfers to and from the airport, free upgrades from economy to business class, an 'Executive Services' concierge service available on a 24x7 basis – and, of course, access to The Club lounges at Australia's major capital city airports (Sydney, Melbourne, Brisbane, Perth and Canberra).

Virgin's The Club is a sanctuary of schmooze for high-flying corporates and captains of industry.. Source: Supplied
Virgin's The Club is a sanctuary of schmooze for high-flying corporates and captains of industry.
Source: Supplied

Secreted behind nondescript doors simply marked 'Private', these havens for the influential and well-heeled are an oasis of calm, privacy and privilege.

Travellers and their guests – who don't even need to be flying – dine from an à la carte menu, choose drinks from a top-shelf selection of wines, and relax in leather-clad winged chairs which are a contemporary version of the classic Chesterfield, until a lounge attendant sidles up to personally advise that their flight is ready for them to board.

This sanctuary of schmooze was seen as crucial in helping Virgin Australia shake off its low-cost Virgin Blue roots and go head to head with Qantas for the lucrative multimillion-dollar travel accounts of Australia's corporate and government market.

But all that could be about to change, with both of Virgin's potential new owners saying they won't chase the top end of town, and dropping the airline's often-criticised 'Qantas Lite' approach for a mid-market position between Qantas and Jetstar.

Membership to Virgin Australia's The Club is on a strictly invitation-only basis.. Source: Supplied
Membership to Virgin Australia's The Club is on a strictly invitation-only basis.
Source: Supplied

"We are not looking to take Qantas head on, especially in their corporate part of the market," Bain Capital's local managing director Mike Murphy has said. “We are not looking to attack the very high end of corporate Australia," adding that the outcome of Virgin's previous battle for the suited-and-booted business travel brigade" wasn’t a happy outcome for anybody."

Likewise, Cyrus Capital lead Jonathan Peachey says that Virgin Australia 2.0 “should sit below that very top tier of where Qantas plays so strongly in, and above and maybe overlapping slightly where Jetstar sits. We think there's a really sweet spot in the middle where Virgin can play very strongly."

Also read: Could the new Virgin Australia be more like Virgin America?

And there's arguably no room in that sweet spot for The Club, given how heavily it's geared towards the highest of high flyers.

Bain's Murphy believes while "there will always be different segments that will want the much more high spend Qantas experience... we absolutely agree that the positioning of Virgin is and should continue to remain on customer value," he tells The Australian.

"In our research, access to The Club is important to a small elite segment of our customers and not the mainstream. Whether or not we retain that is under evaluation.”

Revealed: Perks of 'The Club', Virgin Australia's secret VIP tier

David

David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.

QF

11 Jul 2014

Total posts 533

Borghetti had his marketing right and finances wrong. The shareholders wanted bums on international seats and didn't want to pay taxes here in Australia. My option is rebuild the marketing side with the lower cost and take Qantas on, the younger gen will move with Virgin, the older gen (dying out) will stay with Qantas.

Rxm
Rxm

Jetstar Airways - Qantas Frequent Flyer

14 Jan 2017

Total posts 54

As the older gen will tell you if you get your marketing right the finances should work out too unless you don't have a workable business model. The younger gen might of course want to back an airline that will still be around after they have accumulated all that status and themselves become the older gen. So far banking on Virgin seems to have been a risk. Last time I looked Qantas haven't ramped up wheel chair parking in their lounges or upgraded their aircraft to accommodate the large number of walking sticks or put in incontinence pads on their seat so not sure why people have a mindset that an established business with a proven business model only appeals to older folk.

Qantas - Qantas Frequent Flyer

07 Aug 2013

Total posts 203

I believe the point was an older generation of Australians have remained loyal to Qantas - for loyalty perks, status build up and won't chose to fly another airline if price isn't an option - Qantas has been around for decades and have a dedicated base of generational loyalists which is great. Younger generation are perhaps more cost conscious and willing to fly Virgin Tiger Jetstar over Qantas if price is better - not really focused on loyalty, virgin and the other airlines are new and so are they..

QF

11 Jul 2014

Total posts 533

RXM you could argue everything has a life cycle, TAA was a great brand to travel on, there VIP lounges were quaint and Qantas never did domestic travel. Qantas has a life cycle which was propped up by TAA, when will Qantas life cycle end and would it be around now if not for TAA? Virgin has good marketing but weighed down by debut and didn't have a TAA to acquire to keep it going. I'm 110% sure Qantas wouldn't be here now if it still only did international flights.

Qantas - Qantas Frequent Flyer

04 Mar 2014

Total posts 157

I doubt the numbers ever stacked up for "The Club" anyhow.

bmc
bmc

Virgin Australia - Velocity Rewards

22 Aug 2013

Total posts 169

I wonder if the regular lounges will make the cut with either entity?

Delta Air Lines - SkyMiles

14 Apr 2013

Total posts 333

Maybe just maybe open the club to FF who earn 1,800SC a year and/or fly in J

QF

11 Jul 2014

Total posts 533

100% agree they need to do something for the 1800 people, be a good marketing tool, along with Life Time Gold.

Delta Air Lines - SkyMiles

14 Apr 2013

Total posts 333

& if you maintain 1800 + for 10yrs LTP

Qantas - Qantas Frequent Flyer

28 Oct 2011

Total posts 403

So the Club becomes effectively Virgin's Business class lounge.

Qantas - Qantas Frequent Flyer

25 May 2017

Total posts 76

VA should re brand as Tiger. They have given up on high yield business customers. They will focus on the bus fare customers. Lost opportunity yet again. Hand all your top tier and revenue clients to QF

Qantas - Qantas Frequent Flyer

07 Aug 2013

Total posts 203

Far out people are drama queens on here. This article is speculative which is fine but no where does it say they getting rid of high yield businesss customers - you really think Bain or Cyrus are gonna swing the axe on corp contracts from day one? They may re strategise but to spend more money on rebranding and getting rid of what's existing I highly doubt it - I hope your not in business @blamex. If anything theyll probably renegotiate better deals to ensure they high yeild business customers stay on. Business wont just switch to go to Qantas because they offer a better lounge.. very likely companies all over Australia won't be sending staff on business trips as much as they used to - I know caus I'm affected now blanket ban most likely throughout 2021 as a well known multi billion dollar company I workf or cuts costs for essential and brings back to base business only.

19 Jun 2020

Total posts 21

Agree Dan22, Virgin M2 won't hand over its current business clientel to Qantas on a platter , some FF members have status envy so may be happy to see the end of something not in their grasp. In the new post covid environment will mean less business travel anyway as you stated so less need for lounge capacity.

Qantas - Qantas Frequent Flyer

25 Sep 2013

Total posts 1243

It's amazing how much speculative content this public health crisis has been able to generate. Clearly, there have been some winners amongst all the other losers.

Joe
Joe

03 May 2013

Total posts 543

As I said Virgin tried too hard to be something they weren't ever able to financially pull off. Virgin Blue is what worked.

Virgin Blue only worked until Jetstar came along and ate their lunch. There's not going back there

Qantas - Qantas Frequent Flyer

04 Nov 2017

Total posts 259

Unless if the VA m2 backers had deep pockets like Indigo or SouthWest in today's COVID era where the worldwide aviation industry has been decimated, a rapid transition from FSC to a Virgin Blue LCC for most interested parties will just be an quicker 'alternative' path to direct liquidation.

Probably partly the reason why Bain recently "backflipped" on their Virgin Blue LCCvision for VA mk2 recently and recently announced "me too" path which mirrors rival Cyrus' (mid-market) vision for VA mk 2

25 Aug 2020

Total posts 4

I'm with you, Joe. Borghetti's chip on his shoulder is what got them into more debt. It should never have been a priority to challenge Qantas. Imagine what the creative heads could have accomplished striving for originality. Virgin Blue was awesome, fresh and fun doing it's own thing. Hopefully the new 2.0 Virgin brings back that flare. "The Club" will eventually come back on it's own, if Virgin can prove its stability and focus moving forward.

20 Jun 2020

Total posts 16

I think there's an opportunity here to keep these open for VIPs while also opening it up as a top-tier (P1 equivalent?) FF lounge. This would be a great incentive to drive frequency for plat pax and an effective retention lever for those already eligible. In my limited experience with visiting this lounge with my boss, it has been empty most of the time and if you can make those capacity numbers work, very few changes would be required.

Virgin Australia - Velocity Rewards

15 May 2015

Total posts 9

Its really simple, as a member of The Club I value it enormously for the level of service. This membership has and will in future DIRECTLY influence which airline all my staff and contractors fly with. If it is taken away then I will also take away all that flight purchasing loyalty. Call me selfish, sure go ahead, but anyone who has the same purchasing power will use it in the same way when the fare pricing was almost identical, If either of the new owners throw The Club members to the normal lounge then they should understand that QF will immediately offer them Chairmans Club membership and snare almost all of that corporate spend . The last full year of VA bookings we had totalled in excess of $6M (almost all flexible fares and very profitable for VA) take that revenue away and give it to QA makes no sense at all. The Club's had a seating capacity of around 50 to 60. To suggest offering it to top Platinum flyers is simply impossible as there would be thousands of them.

21 Jun 2020

Total posts 3

I think you're missing the point with The Club. It's not to earn revenue, it's to decrease expenses. Expenses are increased when regulators come up with rules, that make sense to society, but are of detriment to this corporate's bottom line. Solution: give all MP's (except desperate loud mouthed ones) an exclusive invite, give it to some of their wives, or in Julian Hall's case, some of their children, then don't put a price tag on it so it can be claimed under the rules, and if queried just mention it's just just like a Qantas Club/Lounge membership and that's deemed fine if you travel a lot. The 8 free upgrades can just be slid through as BAU. Problem solved. We're all scratching each other's backs now. All you have to do is look at the Register. 105 have Chairman, 94 have The Club.

https://www.aph.gov.au/Senators_and_Members/Members/Register

There's certainly added value in offering it to Corporate. But let's not forget as a secondary by-product of its primary intent.

21 Jun 2020

Total posts 3

I posted a big post, but it disappeared when I hit submit. I'll try my best to summise.

Go look at the Register of Members' Interests - 46th Parliament. 105 MP's have Chairman's, 98 have The Club.

It's not about increasing revenue, it's about decreasing expenses. Giving it away to Corporate, although valuable, is a by-product to its primary intent.


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