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Edition 8: March - June 2007
FFP Online Interview - March 2007: Alan Lias, Head of Loyalty and Business Development at Virgin Atlantic chats with Editor-in-Chief Ravindra Bhagwanani
How are things going for Virgin? AL: On balance very well. Upper Class is very strong as is Premium Economy. Price competition and oversupply in economy remain a challenge.
You are definitely a leader with your premium products. Your Upper Class is unparalleled while you’re revamping your Premium Economy cabin. Do you need a Frequent Flyer Program at all to attract high-yield customers? One could think your product as such is convincing enough! AL: Flying Club is highly valued by our customers and when compared to other schemes seems to be their favourite. We have tried to ensure the programme is consistent with the quality of our overall product offering. In terms of do we need an FFP, absolutely we do. If we were 100% full to all destinations in all cabins maybe we could review whether we need it or not. The fact is that even though we have great products, our customers are very clear that they value rewards highly too and is very much seen as an instrumental part of the overall package.
Can you specify a little bit more the roles of service and the FFP respectively in this lucrative market segment? AL: Virgin Atlantic Service is a point of difference that cannot be copied, like our brand it is something that we own. Also like our brand, it is the only sustainable point of difference. Service is the manifestation of what we do and our personality as a company. Our FFP is also unique and must live up to the Virgin mantra of offering superior value. To be clear though the FFP is not purely a reward programme. It is a business driver and profit centre from which the lions share of the financial upside is reinvested back into keeping the loyalty programme competitive.
What percentage of your Upper Class customers are Flying Club members? AL: We don’t quote actual numbers but the vast majority are Flying Club members.
I did not expect you to give me an exact number, but it therefore seems that the new breed of premium carriers like Eos, MAXjet, Silverjet or L’Avion could do a better job with the introduction of FFPs or the enhancement of their basic schemes? AL: It’s too early to tell what they will ultimately do. Initial efforts look interesting, especially those offering any flight, any seat, any airline availability. The reality is though that a small network means it is harder to earn points and if the points balances needed to get a redemption are greater, the proposition may not work for the customer as well as it works for the airline.
On the other side, the back of your planes is dominated by leisure passengers and your main competitors for these customers are charter carriers. Isn’t your FFP too generous here? British Airways, for instance, credits only 25% of flown miles at discounted Economy fares. AL: We like to be generous and we want our customers, in whatever class they travel in, to have a stake in coming back to us. If you know how to monetise the relationships you have with your leisure customers, it makes perfect business sense. Flying Club also provides us with a point of difference compared to the charter airlines.
You are expanding quickly with new destinations - Chicago, Mauritius and Nairobi coming on board this year. What role does Flying Club play in this context to support such new routes? AL: The key to making Flying Club relevant in new markets is our partner network and financial services business relationships that kick start the ability of new members to earn miles as well as redeem. In terms of driving new traffic, mileage is a great incentive and we always support a new route with tactical offers to consumers and corporate customers. Alan, thank you for helping us to understand the Virgin model a little bit better and good luck for the future! * * *
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