Velocity Frequent Flyer Program have made major changes to its Economy Class Rewards Pricing. Business Class Pricing (for now) is unchanged. While Velocity have announced gimmicky things such as 1 Point Rewards and also claim to be releasing 1 million Economy Reward seats on domestic flights, the focus of this post is to analyse changes to the points table.

What is Changing

Before I get to the new pricing, take a look at the Rewards Table that operated up until yesterday (4 June 2023).

Old Velocity Rewards Pricing Table

As you can see, the price for an Economy Class Reward Seat is fixed and distance based. Pretty straightforward stuff really.

And here is the new pricing they revealed today.

New Velocity Rewards Pricing Table

Instead of a single, easy to follow pricing, we now have multiple tiers. Each distance zone now consists of 3 Tiers of pricing. Tier 2 reflects the older pricing, Tier 1 is the cheapest and Tier 3 the most expensive.

Going forward, when you book an Economy Reward Seat, the price you pay will depend on demand and availability of Reward Seats for that flight at that particular time.

In other words, it is possible that a Reward Seat booked today at Tier 3 pricing becomes available at Tier 2 or Tier 1 price tomorrow, next week, any time really. Conversely, a cheap reward seat available today may go up in price too.

Note that Tier 1 pricing is LIVE now, Tier 3 pricing starts on 5 July 2023.

Virgin Australia Economy Cabin

Is Velocity Heading Towards Dynamic Pricing

Some people may argue that since the pricing tiers are fixed, ie, price will always fall between Tier 1 and Tier 3 it cannot be termed as dynamic pricing. Fair enough, and it is not my argument either that Velocity have already transitioned to dynamic pricing. For now, it has gone from fixed to flexible pricing.

But I have been in the loyalty game long enough to see where this is heading. Make no mistake, this is the first step Senior Management have taken towards shaping Velocity along the lines of major U.S. Frequent Flyer Programs, all of whom now operate a fully dynamic pricing model on domestic flights.

Are Economy Rewards Good Value Now

Velocity are tom-toming these changes in terms of the program now offering best value redemption. But does the bold claim stack up? Heres the new Economy Rewards Table once again :

New Velocity Rewards Pricing Table

Note that while Tier 1 pricing reflects approx. 20% points savings over the older table, Tier 3 pricing adds as much as 27% premium over Tier 2 pricing. So on the whole, negative changes actually outweigh the positives. The cynic inside me might even call these changes devaluation by stealth.

Now lets talk about whether the 20% drop in pricing makes it better value than paying cash for these seats.

Say you want to fly from Brisbane to Melbourne and found Economy Reward Seats at Tier 1 pricing. Since this flight falls into the 2nd distance zone, it will cost you 9,400 points + $40 in fees, taxes and carrier charges.

Tier 1 Economy Reward Pricing from Brisbane to Melbourne

I value Velocity points roughly at 1.25c per point. On that basis, the total cost of this redemption comes to around $157. Your own valuation for Velocity points may be lower or higher, mine I think is very modest.

Now if you look at the cash fares on this route, it isn’t very difficult to scoop-up seats for $120 – $140. In fact, if you can align your purchase with Virgins weekly Happy Hour Sale or other Sale fares it regularly offers, you could even snap-up seats for close to $100 or less.

Examples of Cash Fares on Domestic Virgin Australia Flights

And remember, cash fares earn points and status credits which improves the dynamic even further. So why redeem points?

The larger point I want to make here is that in most cases Economy Reward Seats were and still remain poor use of Velocity points on domestic flights and the changes made to the pricing today do little to alter that.

In Conclusion

Velocity have made a slew of changes to its Economy Rewards Pricing, it has also announced other exciting promotions such as 1 Point Rewards and release of extra Reward Seats, the former of which I find rather gimmicky.

Nobody should be surprised that Velocity are trying to put a positive spin on these changes, personally speaking I am more than a little concerned with the direction the program is heading. Who knows how much worse these changes would have been if it wasn’t for the upcoming Virgin Australia IPO.

No matter how you slice it, today marks a fundamental shift and a strong show of intent from the Management on how it wants to run Velocity Frequent Flyer Program going forward.

What are your thoughts on changes announced today? Leave a comment below.