Is Virgin going to transform The Club into a Velocity elite tier?

Created as a foil to the Qantas Chairman's Lounge, Virgin's elite Velocity Club tier is set for a shake-up.

By David Flynn, August 16 2021
Is Virgin going to transform The Club into a Velocity elite tier?

Virgin Australia will reboot its elite The Club VIP program in early 2022, transforming the exclusive invitation-only scheme into a more open tier which is a better fit with Virgin's place in the market and helps it compete against Qantas for both corporate travellers and top-tier frequent flyers.

The Club, created by former Virgin Australia CEO John Borghetti as a foil to the Qantas Chairman's Lounge, will be rebranded and relaunched with "new premium loyalty benefits".

While some of the private Club lounges will reopen by March 2022, others will remain shuttered for good.

Sydney, Melbourne, Brisbane Club lounges to reopen

Club lounges at Sydney, Melbourne and Brisbane will reopen "no later than the end of March 2022", Virgin Australia Group CEO Jayne Hrdlicka pledged in an email to the estimated 4,000 Club members this morning.

"While we had hoped to re-open the lounges sooner than this, border restrictions have meant we are not seeing booking demand at the levels necessary to re-open these spaces."

"We will however be closely monitoring the situation, and are committed to reopening these Club lounges earlier if borders and demand conditions allow."

Virgin's Chief Commercial Officer Dave Emerson added that the end of Q1 2022 is "when we expect that business travel demand will have recovered."

Melbourne's Club lounge is the only one to have reopened since March 2020, having been pressed into duty as a dedicated space for business class passengers and Velocity Platinum flyers as part of Virgin's temporary Melbourne lounge solution.

Canberra, Perth Club lounges to close

However, the Club lounges at Canberra and Perth Airports won't be coming back, with airline CCO Emerson saying "regrettably, we just couldn’t make them viable."

"While Canberra and Perth are a really important part of the Virgin Australia network, standalone premium lounges in these airports are not commercially feasible," Emerson added.

Virgin Australia's Club lounge at Perth will remain closed.
Virgin Australia's Club lounge at Perth will remain closed.

That said, members of the Club – or its 2022 iteration – will enjoy a little special treatment when flying out of Canberra and Perth.

"We are currently exploring some fantastic options to provide a premium service dedicated to our most loyal members travelling through these cities," Emerson said, adding that Virgin's customer experience team "are working through solutions to provide a premium experience in these airports."

Virgin's new Club lounge network: reading between the lines

Sydney, Melbourne and Brisbane make up the 'golden triangle' which accounts for the bulk of Australian air travel, especially among the business and corporate market.

Virgin has repeatedly laid claim to cost-sensitive slices of this market in the post-Covid era where it expects budget restraints will see a shift to 'value' which favours the challenger and its lower-priced fares over Qantas.

However, Canberra's elite flyers tend to be politicians and power-brokers who are also members of, and are said to generally prefer, the Qantas Chairman's Lounge, so there's little for Virgin to gain by maintaining a Club lounge in the nation's capital.

Perth has traditionally been the domain of the rich WA-based resources market, and it was an early battleground when former Virgin CEO Borghetti took on Qantas with the launch of Airbus A330s boasting international-grade business class seats and chauffeur service.

This sparked a transcontinental turf war which eventually saw both Qantas and Virgin weaponise their A330s with spacious lie-flat business suites – but Virgin's new owners Bain Capital axed the A330s (along with the long-range Boeing 777s) after rescuing the collapsed airline in late 2020.

With its Airbus A330 business class suites, Virgin is at a disadvantage against Qantas when chasing business class travellers.
With its Airbus A330 business class suites, Virgin is at a disadvantage against Qantas when chasing business class travellers.

This leaves Virgin at a competitive disadvantage for business class travellers on Australia's east-west routes, where the premium cabin of its Boeing 737s are no match for the Qantas A330 Business Suites.

It's noteworthy that the Club lounges at Canberra and Perth, like Sydney, are co-sited with the main Virgin lounge (each is on the other side of the kitchen) and share the same reception area, so in theory they'd be easy to maintain.

However, Virgin CEO Jayne Hrdlicka today said the airline would not reopen the "standalone Club lounges" in Canberra and Perth "as the cost of these airport spaces is just too high."

The upshot is that Virgin Australia will focus the fight against Qantas for high-value business and corporate flyers on the lucrative routes between Australia's east coast capitals, where its lower airfares and roughly equivalent business class experience can be used to best effect.

(One missing link is WiFi: Virgin's inflight Internet service remains suspended, while Qantas continues to offer fast and free WiFi across its Boeing 737s.)

The Club to be rebranded, relaunched

As to the Club itself, Hrdlicka said "we will retire 'The Club' brand name for a new and fresh brand that reflects our future direction."

CCO Emerson qualified that this new brand – to be developed by Virgin's marketing team – will encompass both "our premium lounges and loyalty offering."

This will also streamline the previous arrangement, which saw The Club applied as an umbrella term for the program and the standalone lounges, although members' dark matte cards carried bore only Virgin's Flying Maiden graphic and the words 'By Invitation', while the tier itself was called Velocity VIP.

The Club's new name and its complement of "new premium loyalty benefits" will be revealed in the first quarter of 2022 "at the same time our premium lounges re-open," Emerson says.

New benefits for the new Club

Virgin last month surveyed many Club members to determine what they wanted from the airline's most elite tier, and Hrdlicka says there were four clear call-outs from the feedback, with members placing highest value on

  • a private space to work or meet with colleagues
  • dedicated phone concierge service
  • convenience and privacy moving through airports, and
  • complimentary upgrades

This broadly lines up with what several Club members told Executive Traveller at the time of the survey, which focussed on The Club as an overall package for high-value travellers.

"It's about having a better environment than the main lounge, much less crowded, a quieter and more private space where you're comfortable talking business with colleagues," explained one member, a CEO in the manufacturing industry.

Virgin says that complimentary upgrades rated highly among Club members.
Virgin says that complimentary upgrades rated highly among Club members.

Flight flexibility was another item on the survey's checklist.

"That's very important for me," said one Club member who flies between capital cities at least weekly. "If I'm on a 5pm flight and my day finishes early I want to move to the 4pm flight if there's a seat, without paying extra."

He cited a recent experience when changing to an earlier flight would have cost several hundred dollars, "which is more like the Jetstar approach than how you'd treat a high-value customer."

The new Club will be more open

Executive Traveller understands that Virgin's revised plans for its elite Velocity tier will include "new and more transparent eligibility criteria" which will extend beyond the often opaque guidelines of The Club in order for membership to be signed off by the CEO.

That roster was previously a mixed bag of the airline's most highly-valued passengers.

This included politicians and high-ranking government officials, business leaders, A-list celebrities and those with enough sway over a company’s travel policies to direct substantial bookings to Virgin and its partners.

(There were also the more nebulous 'FoJs', which in the Borghetti era stood for Friends of John, and in 2022 may well continue as Friends of Jayne.)

Executive Traveller understands that one model being considered for Club membership would be based on the quantifiable and Excel-trackable booking revenue which could be attributed to that member, such as directing substantial parts of their company's travel budget to the airline.

Whatever name the new Club carries, the program itself will no longer be shrouded in secrecy.

instead, Virgin intends to go public on its new upscale program, with the aim of making it yet another tool for challenging Qantas in securing business and corporate accounts.

The new Club as a Velocity VIP 'Platinum plus' tier?

The combination of "more transparent eligibility criteria" and taking this new tier into the public realm could point to it moving beyond invitation-only status and becoming an attainable tier for Virgin's super-frequent flyers who spend more time in airport lounges than their own lounge rooms.

With access to Virgin's premium lounges and other practical perks, this new VIP tier would help level the field against Qantas' Platinum One for those Velocity frequent flyers who regularly earn the equivalent of Platinum status many times over.

Virgin passengers much currently rack up 1,000 status credits in 12 months to attain Velocity Platinum, but see no benefits once they pass the 1,000 SC milestone.

By comparison, on top of Qantas Platinum's 1,200 status credits threshold, continued flying to hit 3,600 status credits vaults members into the Platinum One category – which comes with added benefits and a much higher level of service when flights are disrupted.

This leaves Virgin without a means to recognise and reward its most loyal and most active frequent flyers – and leaves those flyers with no incentive to keep flying with Virgin, instead of perhaps shifting their business across to Qantas to ensure they also hold Platinum status with the flying kangaroo.

Virgin Australia CEO Jayne Hrdlicka: leaving the door open for an above-Platinum Velocity tier.
Virgin Australia CEO Jayne Hrdlicka: leaving the door open for an above-Platinum Velocity tier.

Speaking with Executive Traveller in May 2021, on the sidelines of the partnership launch between Velocity and 7-Eleven, Hrdlicka said "we are working our way through our VIP program design right now, and we will unveil it as we get confidence in exactly what it will hold."

Was there room in the new value-oriented Virgin Australia 2.0 – an airline which has staked out the middle of the market rather than the top end of town – for an elite invitation-only program like The Club?

"That's what we are working through right now, " Hrdlicka said. "We have lots of VIPs who travel with us every day and we want to make sure they that have exceptional experiences every time they travel with us."

Asked if the Velocity VIP could be opened up to 'super frequent flyers' who reach Velocity Platinum status many times over, along the same lines as Qantas Platinum One, Hrdlicka responded "there are lots of different ways you can think through a VIP program and we're considering all the options in what makes best sense for our guests."

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.

16 Aug 2021

Total posts 1

All that's left to do now is reopen the CNS lounge. Especially with ADL/PER starting soon.

Qantas - Qantas Frequent Flyer

21 Jan 2014

Total posts 317

You raise a good point which highlights the confusion within VA, who want be a mid tier airline, but will keep an invitation only premium lounge in some places whilst closing base level lounges in regional areas, where is the consistency in that.

QF

11 Jul 2014

Total posts 662

They "VA" need to release the details of the new tier level early this year most people need at least 3 - 6 months to plan ahead, I've worked out if state borders (NSW) reopen in late December I will hit 600 status  in January - February so if they want my business I need to know if I'm booking VA or QF metal.

Virgin Australia - Velocity Rewards

24 Jan 2018

Total posts 502

Ditto for international flights (said he with both jabs sorted).  I need to fly to London twice a year, but get to chose when.  Those bookings are usually made during Double Status Credit offerings.  If Jayne doesn't get that network (Delta, Virgin Atlantic, SIN Air) sorted soon, I'll take the safe road, book those flights with QF and, after that . . . well, I'll always have the memories.  

As for her comment "we are working our way through our VIP program design right now, and we will unveil it as we get confidence in exactly what it will hold.", my response is simple: "learn to chew gum and walk", because I can (and will).  If need be, get an ex 'Casino Tzar' onto it, they have the best VIP programs in the world (according to one former Qantas CEO).

This reads like a very smart move by Virgin, they get a VIP tier with the core benefits of The Club but also something in the same league as Platinum One. Without any overseas flights though, any 'more open' tier above Velocity Platinum would need a LOT of domestic flying, and in more expensive fares, but I suppose this is exactly what Virgin wants, the people who might fly domestic twice a week at a fully flexible economy fare or in business class.

It sounds like Virgin is going to make the Club more into a super-elite tier with both invited members as well as those who have proved their worth. Sounds like an interesting approach. But it still amazes me it's taken them this long to work it out, to do the survey etc. And from August 2021 to March 2022, that's a long time, eight months still to go!

Virgin Australia - Velocity Rewards

24 Jan 2018

Total posts 502

I think Bain needs to re-assess the perceived value of its current CEO at Virgin2.0 and start a quiet search for a replacement.  

Qantas - Qantas Frequent Flyer

26 Nov 2012

Total posts 93

Why not just pitch it against the QF Biz lounge for the Platinums?  I don’t get how they have gone MOM but still want to keep their toes in the elite camp. Their marketing people need to get back to uni and learn about target market engagement, unless they aren’t really wanting to be a MOM carrier. 

Virgin Australia - Velocity Rewards

21 Feb 2017

Total posts 38

I'd be happy if they introduced lifetime status as well as a "platinum plus" tier

06 Sep 2019

Total posts 15

Hopefully having been Platinum for 10 years will count for something.


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