It’s a strange time in the history of loyalty programs. Earlier today it was announced that Air Canada is buying Aeroplan. First Air Canada spun off their loyalty program, then they decided to not renew their contract, and then they outright bought the program.
But that might not even be the weirdest loyalty program news, as I think Delta and Virgin take the cake for that.
It has just been announced that a new Virgin-wide loyalty program will be created in 2019, and it will be owned by the Virgin Group and… Delta?!
What we know about Virgin’s new loyalty program
Okay, to be honest, there aren’t actually that many details as of now. Here’s how this new program is described:
Today we’re announcing the intention for the Virgin Group and Virgin Atlantic to launch a new Virgin-wide loyalty programme, with unique and differentiated reward opportunities, to reward customer loyalty across Virgin branded companies. This new loyalty programme will offer members the chance to earn and spend ‘miles’, the currency of Virgin Atlantic’s frequent flyer programme, across a range of products and services.
What’s interesting is that a new company will be created for this — Virgin Group Loyalty Company — and it will be owned by Virgin Group and Delta Air Lines.
It sounds like Virgin Atlantic Flying Club is sticking around as Virgin Atlantic’s frequent flyer program, and miles will continue to be used as the currency. Virgin Atlantic says that Flying Club members can look forward to “an expanded range of valuable ways to earn and spend miles.”
That’s all we officially know as of now, and all we can do otherwise is read between the lines.
Virgin is essentially launching their own “Avios” currency
While many of you outside the UK may be familiar with British Airways Avios, Avios as a currency goes way beyond that.
Avios is not only the currency for British Airways, Iberia, and Aer Lingus, but it’s also a “generic” currency that has all kinds of partners, so you can earn Avios for everything ranging from supermarket purchases to online shopping.
Virgin isn’t even being subtle about the fact that they’re trying to recreate the Avios program. The CEO of the new company will be Andrew Swaffield, and he’s the CEO of Avios.
The ownership structure is interesting
While the exact details of the ownership structure haven’t yet been revealed, it has been revealed that the new company will be owned by Virgin Group and Delta Air Lines.
Virgin Atlantic is owned 49% by Delta, 31% by Air-France KLM, and 20% by Virgin Group.
I do find it curious that Virgin Atlantic as such doesn’t have any direct stake in this company. Sure, two of the companies that have stakes in the airline own the new company, but that’s still an important distinction.
If the number of Flying Club miles being issued greatly increases, what does that mean for the value of Virgin Atlantic miles? Furthermore, Delta is involved, so that can’t be good news for the value proposition of the loyalty program.
Bottom line
It seems like Virgin is trying to launch a competitor to the Avios program, which doesn’t seem unreasonable as such. What I’m most curious about is how this program develops given the ownership structure, and what exactly Delta is hoping to get out of this.
What do you make of Virgin’s new loyalty program?
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