Virgin America Announces EleVAte Redemption Levels and More

It has been a very busy start to the month of October for Virgin America. So far, they’ve rolled out point redemption in the EleVAte frequent flier program, launched Main Cabin Select, added refundable fares, introduced a credit card, and started looking for even more money. Whew. Let’s look at some details on what they’ve been up to.

EleVAte Points Redemption
It *only* took them 15 months, but the airline has finally brought out a redemption plan for its frequent flier program. The structure seems to make a lot of sense to me in that it’s based on how much you spend, but there are issues in my opinion.

First, you earn 5 points for every dollar you spend on the BASE FARE. Taxes and fees annoyingly don’t count. I’d rather see 4 points per dollar for all dollars spent than 5 just for the base fare. It makes it harder to figure out how much you’re going to earn instead of just being able to look at how much you’re putting on your credit card.

But that’s just on the earning side. Let’s talk redemption. The airline makes it clear that you can redeem points for any flight with seats available in any cabin, but they reserve the right to change the redemption amounts depending upon demand. A quick look shows that they seem to multiply the displayed one way fare by about 46.5 to determine how many points you’ll need. So, a flight from LAX to JFK that costs $149 each way will go for 6,930 points while a $549 flight will cost you 24,372 points. They do make it easy to use the website to see how many points would be necessary.

My only problem here is that it’s not very transparent. It makes it hard to set a goal for how many points you need to save up for a flight, because you don’t know what you’ll need until the time of booking, and that can be annoying. But that being said, it’s still a frequent flier program that’s easy to explain to people, and that’s a good thing.

So let’s look at an example to get an idea of what the value is here. I pulled up LAX to JFK from Nov 11 to Nov 13. All nonstop flights were a low $149 each way or 6,930 points. So, if you spend roughly $3,000 in travel ($2,772 plus tax), you can get enough points for one free roundtrip ticket on those off peak flights.

Of course, it’s apples and oranges to compare this to another airline program because there are so many variables, but let’s assume that we’re talking about someone who exclusively flies LAX to JFK roundtrip. You would need about 5 roundtrips to get enough miles to get one for free. That would be mean you’d have to pay an average of $600 roundtrip to get the same value on another airline that you would get from Virgin America. You can probably do better than that.

Main Cabin Select and Refundable Fares
The refundable fare thing is no surprise. It took JetBlue a few years to realize that there was demand for the product and Virgin America caught on more quickly. So I won’t spend much time focusing on that; let’s talk Main Cabin Select.

As promised, the product is now ready to go, but I am absolutely shocked at the HUGE spread between regular coach and Main Cabin Select. Remember those $149 one way flights I looked at before? To get a little more legroom you’d have to pay $484 one way. Are you friggin’ kidding me?!? When we look at Thanksgiving, a $434 one way in coach would cost $679 in Main Cabin Select. This seems extremely pricey to me for what you get.

At least they’ve reduced the spread on shorter haul flights. A $101 seat from LAX to SFO in coach will only be $189 in Main Cabin Select, but that’s still a pretty hefty pricetag for such a short flight. I think they’re likely pricing themselves out of the market here. The idea isn’t a bad one, but prices are going to have to adjust.

Barclay’s Virgin America Signature Visa Card
There is one big benefit with this card . . . no annual fee. So, if you plan on flying Virgin America, you can basically get free points with this card, and that’s not bad. You’ll also earn 1 point per dollar spent, as you do with most airline cards. That can actually make the Virgin America eleVAte program much more lucrative.

In this case, you can compare airlines because the earning is effectively the same. If I spend $10,000 on my AAdvantage Visa, I get 10,000 points in AAdvantage. If I spend $10,000 on my Virgin America card, I get 10,000 points in Virgin America’s program. And since I can get a roundtrip from LAX to New York for as little as 14,000 points, that $10,000 of spend on my credit can go a lot further. Of course, if you wanted to use it for First Class, it would be a lot better to use your AAdvantage card instead. It just depends what matters to you. If you just want to get yourself across the country for the least amount possible, this is the way to do it.

Looking for More Funding
I promise, this is the last thing I’m going to talk about today. I could probably republish this post as a book. There was an article in the Financial Times saying that Virgin America is looking to raise even more money. In the same breath, they say that load factors are above 80% and they’ll be profitable by the second quarter of next year. Really?

The 80% load factor thing isn’t that impressive if you’re talking about summer loads. Unfortunately they won’t tell us how they’re doing financially, so we don’t know if people are paying more than $149 for those cross country flights. But the fact that they need more money only six months after securing an additional $100 million isn’t a good sign. I suppose it’s possible they just want to store up cash while they can . . . . If the money is cheap and there for the taking, that’s a smart move right now.

Unfortunately, however, we won’t know the reasons here, because they continue to fight the DOT on the requirement to release their quarterly financial data publicly. I know all their arguments, but the bottom line is that people often have to buy tickets fairly far in advance when they fly, and they want to have a good idea that their airline will still be around when it comes time to fly. Until Virgin America starts playing by the rules again (or I should say, until the DOT finally rules on the appeal), we won’t really know much about the financial state of the airline. I’d imagine it’s fine for the foreseeable future, but I really don’t know.

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