The Loyalty Wars Heat Up: Virgin Atlantic’s Bold Play Against British Airways
Virgin Atlantic is aggressively courting disgruntled British Airways customers, capitalizing on recent changes to BA’s loyalty program. The airline’s “Save Your Tiers” campaign, offering upgraded Flying Club membership, is already attracting “thousands” of new sign-ups, with expectations of reaching “tens of thousands” by the campaign’s end on February 23rd.
BA’s Loyalty Overhaul: A Catalyst for Change
British Airways revamped its Executive Club loyalty scheme last April, shifting the focus from distance travelled to money spent. This change made it harder for leisure travellers to achieve Gold tier status, sparking criticism and creating an opening for competitors like Virgin Atlantic. The new system aimed to address overcrowding in BA lounges, but alienated a segment of its customer base.
Virgin’s Strategic Response: ‘Status Match’ and Beyond
Virgin Atlantic’s response wasn’t simply a “status match” – offering equivalent status in their program – but an upgrade. This more generous approach, exceeding similar offers from Air France-KLM and Lufthansa, is proving effective. Anthony Woodman, head of Virgin Flying Club, anticipates double-digit percentage growth in Gold and Silver members over the next year.
The Risks and Rewards of Loyalty Program Warfare
While attracting new members is a win for Virgin, potential costs exist. Virgin may need to compensate partner airlines for lounge access granted to new Gold members who fly with Delta or Air France, without generating direct revenue from those flights. The strategy hinges on converting these new members into loyal Virgin Atlantic flyers.
Lounge Capacity Concerns? Not Yet.
Despite the influx of new members, Virgin isn’t overly concerned about lounge overcrowding. With roughly a tenth of the departures of British Airways, the airline believes it can comfortably accommodate the increased demand. Woodman noted that significant growth would be needed to create a behavioral risk related to lounge capacity.
BA’s Response: A PR Stunt?
British Airways dismissed Virgin’s campaign as a “well-executed PR stunt,” asserting that customers recognize the tactic and that their data demonstrates continued success with the new loyalty program. BA highlighted improvements in reward availability and reduced costs for using frequent-flyer points.
Future Trends in Airline Loyalty Programs
The Virgin-BA battle highlights several emerging trends in airline loyalty programs:
The Rise of Value-Based Loyalty
BA’s shift to a spending-based system reflects a broader industry trend. Airlines are increasingly prioritizing revenue-generating customers over those who simply fly frequently. This approach can be lucrative but risks alienating loyal leisure travellers.
Personalization and Dynamic Rewards
Expect to spot more personalized offers and dynamic reward pricing. Airlines will leverage data analytics to tailor rewards to individual customer preferences and spending habits. This could involve offering bonus points on preferred routes or customized upgrade options.
The Importance of Partnerships
Airline alliances and partnerships will become even more critical. As seen with Virgin’s potential costs related to partner lounge access, managing these relationships effectively is crucial for maximizing the value of loyalty programs.
The Blurring Lines Between Programs
The “status match” phenomenon and Virgin’s upgraded offer demonstrate a growing willingness to poach customers from competitors. This competitive pressure will likely lead to more innovative and aggressive loyalty program strategies.
FAQ
Q: What is a “status match”?
A: A status match is when an airline offers you equivalent status in their loyalty program based on your existing status with another airline.
Q: Why did British Airways change its loyalty program?
A: BA aimed to reduce overcrowding in its lounges and reward customers based on their spending rather than solely on distance travelled.
Q: What is Virgin Atlantic’s “Save Your Tiers” campaign?
A: It’s a promotion offering British Airways customers an upgrade to a higher tier in Virgin Atlantic’s Flying Club program.
Q: Could Virgin Atlantic’s strategy backfire?
A: Potentially, if the new members primarily fly with partner airlines and utilize lounge access without generating direct revenue for Virgin.
Did you know? British Airways and Virgin Atlantic have a long-standing rivalry, dating back to Richard Branson’s founding of Virgin Atlantic after being bumped from an American Airlines flight.
Pro Tip: Before switching loyalty programs, carefully compare the benefits and redemption options to ensure the new program aligns with your travel habits.
What are your thoughts on airline loyalty programs? Share your experiences in the comments below!
