Virgin customer loyalty program, initiatives help deliver solid first-half results

Airline posts strongest net profit result since 2010, and says it's on track to reach 7 million Velocity frequent flyer members by 2017

Virgin Australia has highlighted strong customer loyalty program growth, along with the success of several new customer-led initiatives, as contributors to its strong first-half financial results.

The airline posted half-year revenues to 31 December 2015 of $2.7 billion, an increase of 11.8 per cent year-on-year, with a group underlying EBIT of $161.4m, also a significant improvement. Underlying pre-tax profit was also up by $71.3m to $81.5m, while net profit was $62.5m, the group’s highest result since 2010.

Virgin’s Group CEO, John Borghetti, attributed the solid results to efforts to strengthen the fundamentals of each line of business, including domestic and international travel as well as its Tigerair subsidiary. The group reported very strong revenue per available seat kilometre (RASK) growth during the first half across all three types of air travel.

Borghetti also noted the success ongoing customer experience-led initiatives.

“The group is seeing very positive results from ongoing work in delivering an outstanding customer experience,” he said. “Customers voiced their strong support for new initiatives launched during the half and the Virgin Australia Group maintained its lead in domestic, on time performance over its major competitor for 15 consecutive months.”

Recent initiatives included opening a new Perth terminal and lounge, which led to a 7.6 per cent improvement in customer satisfaction scores, and upgrades to the Brisbane lounge. Virgin said the launch of ‘the business’ on A330s was also well received, with customer surveys showing 83 per cent preferred these to Qantas’ comparable offering.

Virgin Australia’s Velocity customer loyalty program proved another strong performer during the first half, delivering revenue of $154.8 million, a 26.3 per cent improvement year-on-year. Underlying EBIT also rose to $70.8 million, a 56.6 per cent increase on first-half 2015.

Membership also grew by 2600 members a day to 5.7 million, a rise of 21.7 per cent year-on-year.

“Velocity’s existing initiatives and partnerships are resonating with Velocity members and the business is continuously finding more innovative ways for members to earn Velocity Frequent Flyer points,” Borghetti said.

“Velocity is set to meet its earnings growth targets of at least 15 per cent growth in Underlying EBIT by the end of the 2016 and 2017 financial years and have more than 7 million members by the end of the 2017 financial year.”

Adding to the Velocity business in the first half was Virgin’s acquisition of data analytics consultancy, Torque Solutions, which was purchased for $4.8 million. According to the airline’s financial statement, the business has contributed revenue of $1.4 million and a net loss of $200,000 in the first half of the year.

Virgin sold a 35 per cent in its Velocity frequent flyer program to Affinity Equity Partners in late 2014, raising a reported $336m from the deal.

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+: google.com/+CmoAu

Join the CMO newsletter!

Error: Please check your email address.
Show Comments

Supporting Association

Blog Posts

The evolving role of the CMO

They say that “change is the only constant”. It’s fair to say that in the 20 years I’ve been in marketing positions, the role of the CMO has changed completely.

Tim Tez

Chief product and marketing officer, MetLife

Transform your marketing analytics to outperform your competition

As digital and offline brand experiences diversify, more customer data is becoming available to marketers. At the same time, the number of tools available to analyse this data is increasing rapidly. Leading marketers are taking advantages of these shifts and transforming their marketing analytics practices to outperform their competitors.

What CMOs get wrong with content marketing

Content marketing: It’s everywhere you look, and it’s a proven component of an effective marketing strategy. And yet more than half of all marketing professionals struggle with a lack of internal content creation resources.

Aaron Agius

Co-founder and managing director, Louder Online

I have consistently the worst customer experiences from AUSPOST. I regularly send packages and letters via registered post service, and t...

Winnifred Antoinette Mok

Aus Post's customer chief: CX is about convenience, control and choice

Read more

Such a great new you've shared with us I really agree with the records you shared as this is true that this report may able to quantify t...

Lucy Eva

Report: Mobile app time dominates Australian smartphone usage

Read more

It is heartening to see that the South Pole Group use a Balanced Scorecard to monitor progress. In such a complex area where communicatio...

Clive Keyte

How South Pole Group is tapping media intelligence for customer conversion

Read more

Having had the pleasure of working with Kim, she has one of the strongest strategic minds I have ever come across. She has the ability to...

Anonymous

Helloworld scraps CMO role

Read more

This is what happens when dealing with 3rd party technology, get technology inhale and never weary about this anymore .

KyleThomas

Criteo and Steelhouse legal spat escalates

Read more

Latest Podcast

More podcasts

Sign in