Virgin Australia Velocity’s BP points partnership still up in the air

By Chris Chamberlin, January 16 2018

The fate of the 'earn points at the pump' partnership between Virgin Australia's Velocity loyalty scheme and petrol giant BP remains unresolved, with BP considering a legal challenge against the ACCC's decision to reject the company's $1.8 billion deal to purchase Woolworths' chain of petrol stations.

Velocity Frequent Flyer and BP launched their partnership in April 2015 an in effort to equalise retail points-earning opportunities for Velocity members against Qantas' dominant alliance with Woolworths and Caltex.

However, December 2016 saw BP move to purchase the Woolworths/Caltex chain, bringing over 500 Woolworths-branded fuel outlets under the wing of BP.

The Woolworths-Caltex service stations would be rebranded as BP outlets and absorbed into the larger BP network, with BP becoming "a cornerstone partner in Woolworths' Everyday Rewards loyalty program" according to the petrol retailer – effectively dumping Virgin for Qantas by dint of the Woolworths-Qantas tie-up.

Given the scope of the purchase, this was subject to approval by the Australian Competition and Consumer Commission, which has now decided to oppose the sale of the Woolworths-owned service stations to BP due to concerns this would raise overall petrol prices.

"BP prices at premium levels, whereas Woolworths is a strong price competitor," ACCC chairman Rod Sims said.

"So you find that BP's prices in the major capital cities are anywhere between 1.5 and 3 cents a litre greater than Woolworths. More important, perhaps, is that BP increases its prices more quickly in the up phase of the fuel price cycle and is slower to discount."

Average petrol prices in key Australian markets, January-March 2017. ACCC
Average petrol prices in key Australian markets, January-March 2017
ACCC

"Fuel is such an important component of people's income and welfare that even a 1 to 2 cent a litre increase does matter," Sims added. "So we think that is substantial and therefore meets the hurdle of a substantial lessening of competition."

A snapshot of the spread of petrol pricing in Brisbane. ACCC
A snapshot of the spread of petrol pricing in Brisbane
ACCC

For its part, Velocity sued BP  in the Supreme Court of Queensland for attempting to wrap-up its points partnership earlier than planned, with BP defending its position, arguing that Velocity had breached its partnership agreement by allowing members to earn Velocity points on petrol purchases at rival Coles Express stations via its Flybuys alliance.

The court ruled in favour of BP, declaring that BP terminated its participation in the Velocity program as of July 1 2017, although the competition watchdog's decision made this a moot point.

For now, motorists can keep topping up their frequent flyer points balance while topping up their tank. 

A BP spokesperson assured Australian Business Traveller that “customers can continue to use their Velocity Frequent Flyer card to earn and redeem points on fuel and retail purchases in-store at BP until further notice,” and that BP is “still considering the full impact of the recent judgment.”

A spokesperson for Velocity Frequent Flyer added that “for now, it’s business as usual and there are no changes for our Velocity members.”

That means you can still earn two Velocity points per litre of fuel purchased and two Velocity points per dollar spent in-store at participating BP service stations, by swiping your Velocity card at the cash register before completing payment.

However, BP recently rolled out a new mobile payment app for consumers – BPme, which allows motorists to pay for fuel from their cars rather than at the counter inside – which does not provide a way to earn Velocity points: even at BP locations where Velocity points can be earned by paying in-store.

When asked why points weren’t implemented in the app, which was launched prior to the court’s judgement, BP says that “we had always planned on introducing the fuel payment function first, and we intend to introduce new features in (the) future.”

We’re told that the ability to earn points through the app is coming “in 2018” along with coffee pre-ordering, for easy collection in-store after filling the tank.

Also read: How to switch off Virgin Australia's annoying 'pay with points' option at BP

Additional material by David Flynn

Chris Chamberlin

Chris Chamberlin is the Associate Editor of Executive Traveller and lives by the motto that a journey of a thousand miles begins with a single step, a great latte, a theatre ticket and a glass of wine!


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