Frequent flyer battle: Qantas v Virgin Australia

The business travel battle between Qantas and Virgin Australia is one waged on many fronts.

There's a dogfight in the skies – with seats, inflight meals, the frequency of flights and, of course, ticket prices.

There's also the 'ground war' of lounges and streamlined check-in services.

Now we're set to see a third front open up, as Virgin Australia readies an assault on the Qantas Frequent Flyer scheme.

There's already a bit of early thrust and parry, with both airlines currently offering a double serve of frequent flyer points on their domestic and international flights.

It's a limited-time deal: you'll need to book your ticket by the end of this week, although the travel dates themselves can be through to early next year. (You'll also need to register before you book – that's done at the web pages for the Qantas and Virgin Australia double points deals).

Qantas counts more than 10 million members in its frequent flyer program, against 4.5 million in Virgin Australia's Velocity scheme. Virgin Australia CEO John Borghetti wants to boost that number to 7.5 million by the end of 2017.

It's no surprise that Virgin Australia wants to grow Velocity. Unhampered by the bothersome expense of aircraft, jet fuel and staff, frequent flyer schemes can prove a cash cow for airlines.


In the 2013-2014 financial year, the Qantas Loyalty division recorded pre-tax earnings of $286 million. That wasn't just a heroic increase of 10 per cent over the previous year, it was almost 10 times the pre-tax take of the Flying Kangaroo's entire domestic airline.

In fact, analysts have valued the Qantas Loyalty division as high as $3 billion – significantly greater than the airline itself.

Virgin's frequent flyer sell-off

However, after months of speculation that Qantas would sell off part of its lucrative frequent flyer scheme to reduce its record losses, the Flying Kangaroo has chosen to hang onto the program.

Instead, it was Virgin Australia which unexpectedly handed a 35 per cent stake in the Velocity frequent flyer business to Hong Kong-based Affinity Equity Partners last month, netting $336 million.

Perhaps predictably, Borghetti is quick to assure there will be no changes to the value or redemption rates of Velocity points.

"Absolutely, categorically, a hundred per cent not," Borghetti told High Flyer.

"The airline maintains control of the program and continues to decide on inventory, points and all the rest of it, so nothing has changed.

"What will change, going forward, will be the ability for members to have more opportunities to earn and burn points, because the network of relationships that Affinity brings to the table will enable us to significantly grow the partners with whom we deal now."

Earn points while you shop

Both Qantas and Virgin Australia already let frequent flyers earn points through online shopping with a clutch of partners.

While Virgin's Velocity eStore has some 50 partners compared to the 15 of Qantas' recently-launched Online Mall, Qantas is working hard to catch up fast.

The two already share several of the same partners including Apple, Booktopia, David Jones, eBay and Macy's, and in some instances Qantas offers more than twice as many points as Virgin Australia.

For example, you can score 5 Qantas points for every dollar spent at David Jones and 4 points per dollar at Booktopia, versus only 2 Velocity points per dollar at both outlets.

There are other ways in which the Qantas and Virgin Australia schemes run neck-and-neck.

Both airlines have upgraded their frequent flyer membership cards to work as prepaid debit cards for use in Australia and overseas, with support for up to 10 foreign currencies with money stored in separate 'virtual wallets'.

Earn and burn options

Qantas's membership of the Oneworld airline alliance gives its frequent flyer scheme great scope for globetrotters.

There are far more airlines on which you can 'earn and burn' points compared to Virgin Australia's smaller web of partnerships.

A Qantas Gold or Platinum card also opens the doors to far more lounges in airports around the world than Virgin Australia's same-coloured slabs of plastic.

However, Virgin packs a few extra perks into its packages for top-tier frequent flyers.

Velocity Gold and Platinum members receive one year's gratis status in the equivalent loyalty schemes of the Hilton or IHG hotels group for free room upgrades, Internet access, breakfast and late check-outs.

Velocity Platinum flyers also get four free domestic upgrades a year from an economy Flexi ticket to business class.

Virgin also boasts a more family-friendly program than Qantas with 'family pooling' of Velocity points and status credits and a 'parental leave status pause' for up to six months when a new bub sees you temporarily grounded.

Qantas or Virgin Australia – which frequent flyer scheme do you prefer, and why?

David Flynn is a business travel expert and editor of Australian Business Traveller.

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