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 newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments

Blog Posts

3 marketing mistakes to overcome when courting prospective customers

Marketing that urges respondents to ‘buy now’ is a little like asking someone to marry you on your first date. At any time, only 3 per cent of the market is looking for what you’re selling, so the chances of your date randomly being ‘The One’ is pretty slim.

Sabri Suby

Founder, King Kong

Why are we dubious about deep learning?

The prospect of deep learning gives those of us in the industry something to get really excited about, and something to be nervous about, at the same time.

Katja Forbes

Founder and chief, sfyte

Why you can’t afford to fail at CX in 2019

In 1976 Apple launched. The business would go on to change the game, setting the bar for customer experience (CX). Seamless customer experience and intuitive designs gave customers exactly what they wanted, making other service experiences pale in comparison.

Damian Kernahan

Founder and CEO, Proto Partners

Thank you for the info , being part of a digital marketing agency in kerala , this proved handy and get to know with upcoming trends. htt...

Dotz Web Technologies

Predictions: 9 digital marketing trends for 2019

Read more

So who then is correct? The Research or The skilled Digital people.

Anene

Report reveals Australia faces digital skills shortage

Read more

The blogs are really appreciable and one can trust the knowledge and information provided in the writing.The article you do produce on a ...

Prince Arora

5 brand strategy lessons from Gelato Messina

Read more

Thanks for sharing! Meet the Softcrylic team at Adobe Summit 2019. This team works with a broad range of clients helping solve complex bu...

Anderw Hagel

What Richard Branson has to say about experience delivery, leadership and disruption

Read more

Thx for share!

Alex Mega Lover

Telling a story helps Football Federation Australia build brand awareness

Read more

Latest Podcast

More podcasts

Sign in