Virgin Australia sells 35% stake in Velocity Frequent Flyer

By David Flynn, August 29 2014

Virgin Australia has sold just over one-third of its Velocity Frequent Flyer program in an attempt to turbocharge the scheme and double its membership from 4.5 million to 7.5 million in the next three years.

The airline reaped $336 million from the sale of a 35% stake in its Velocity business to fund manager Affinity Equity Partners, in a purchase which values the entire program at $960 million.

Velocity Frequent Flyer will remain part of the Virgin Australia Group but gain its own Velocity Frequent Flyer Board, although parent airline will retain a majority stake in Velocity Frequent Flyer and majority representation on the Board, including the appointment of Chair and 65 per cent of voting rights of security holders.

"Today’s announcement marks a significant milestone as it validates the success of the Velocity Frequent Flyer business to date" said Virgin Australia CEO John Borghetti.

The program remains a key value driver for the Virgin Australia Group and through access to additional capital and resources, this transaction will allow us to accelerate the program’s strategy and realise its full potential as a world class loyalty business."

“Affinity brings a wealth of experience in driving rapid and sustainable growth across a diverse range of businesses and we look forward to working with them to enhance value."

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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.

10 Mar 2011

Total posts 531

Interesting that VA have decided to sell a stake in Velocity at the same time that Qantas opted against selling a stake in its program. I do have to wonder what the impact on Velocity will be with an external partner on board. It will be interesting to see who made the better decision here.

Qantas - Qantas Frequent Flyer

10 Jan 2013

Total posts 715

I think the answer AusFlyer to that question lies in the operating age of the two schemes - the QFF scheme is a long established cash cow entity for Qantas, whereas the Velocity Rewards scheme is very much still in its growth stage (it's still expanding its hotel partners list for example, whereas QFF only has to maintain theirs) and is more likely to benefit from a joint venture partnership.

I'm glad VA kept majority control though, as it's important that existing benefits to VFF members are not diminished (which would hurt VA, so it's more likely to rule out any such moves).

12 Jun 2013

Total posts 744

That's a silly graph. It would make more visual sense if the "indifferent" travellers were in between the QF and VA loyalists.

Personally I've switched from QF to VA. Partially because of several annoying experiences with QF. Partially because VA offered me trial gold status based on my employer when I moved back to Australia with UA gold, whereas QF told me to take a hike. Partially because VA gold is substantially easier to retain than QF gold. Partially because VA gold is worth more in many situations -- you get priority security and boarding while on QF these are reserved for platinums.

On the downside, I really wish they were better and more consistently integrated with their partners. I get lounge access on DL but have to pay money for even my first checked bag. I get some fantastic privileges on NZ, but no lounge access at SFO. 

Thai Airways International - Royal Orchid Plus

15 Jan 2013

Total posts 279

Their Partners serve the places I go on VA easy as that and it's cheaper as well.Personally never have had too many problems with the membership outside of Australia.First Time I used it to fly Singapore Airlines no problems(The Booking originally had my Thai Royal Orchid Plus number but I went into the Adelaide Office to change it) More than happy too and even on the way home from Singapore the check in staff at Changi knew what a Velocity card is.


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