In case you missed it, JetBlue and Virgin America both announced earlier this week that they would be rolling out elite programs for their frequent fliers. What are the chances of that happening on the same day? Pretty good, actually, because they were announced at the start of the Global Business Travel Association (GBTA) conference which is an enormous event for corporate travel. These moves shouldn’t be a surprise since most low cost carriers have been moving toward courting the business traveler for some time.
Both airlines have been making a big push for a bigger slice of that oh-so-tasty business travel market because that’s where the money is. (This is music to Spirit’s and Allegiant’s ears because it just gives them more room to serve the leisure traveler.) As JetBlue has started to develop more utility for business travelers in Boston and New York, it naturally wants a bigger piece of that market. (You think those 10 daily Boston – Washington/National flights are for leisure travelers?) And Virgin America knows it needs more revenue if it has any hope of making a profit.
So what is it that business travelers want? They want a great schedule and they want free upgrades. Hmm, well this move isn’t going to give them any of that. But it will make the travel experience more pleasant, and it provides recognition for those who do spend a lot with the airline.
Big Money to Get In
The key here is “spend” … and spend a lot. While most traditional legacy airline elite status programs are based on miles flown (with some element of spend), these are almost purely spend-based. For Virgin America, it is 5 points per dollar spent and you need 20,000 points for basic Silver elite (it’s 50,000 for gold). That’s a lot of dough to spend just to earn elite status. At $250 each way, that means 16 flights between JFK and SFO are needed to earn elite status as compared to 10 on a legacy airline.
JetBlue will give you Mosaic elite status (the only level it offers) when you hit 15,000 points (or 30 total flights and 12,000 points). But for JetBlue, you get 3 points per dollar. That means 20 flights will get you elite status on that route at $250 each way, double what it would take if you flew a legacy airline.
So it can be pretty hard to qualify, though this might be an extreme example. Shorter flights tend to have a higher spend per mile so the gap shrinks. In LA to SF, for example, if you have a $150 fare, you need 27 flights on Virgin America, 30 on JetBlue, and 30 on United for base level elite status. But JetBlue and Virgin America tend to skew toward longer flights anyway.
What do you get?
But are the benefits worth it to dedicate your flying to one of these airlines? I guess it depends on who you are. Most of the benefits are pretty standard for elite status. You get free checked bags (well, more than the 1 you already get for free on JetBlue). You also get priority boarding and security (plus priority check in for Virgin America). You’ll also get dedicated customer service contact lines. Virgin America has gone a little further with dedicated live chat and email as well. You’ll also get the obligatory bonus points to earn on travel, but you won’t get upgrades.
No upgrades?!?! I know a lot of you are having heart palpitations. But this is smart because the airlines don’t need to dilute the value of their premium offerings like legacy airlines have.
Of course, JetBlue can’t upgrade you very far anyway since it only has extra legroom seating and no first class. People who earn status this year get 6 free upgrades to those extra legroom seats, but that’s a one time deal. After that, the only upgrade benefit is that you can use points to upgrade instead of just dollars like everyone else.
For Virgin America, the stakes are higher but upgrades are still very limited. There is a twist in that the airline is now dedicating seats toward the front of the cabin as premium seats. They’re no different than anywhere else on the airplane but only elite members can sit there for free until the day of check in. Other have to pay for “Main Cabin Express.” On the day of check in, elites can sit in the Main Cabin Select exit row and bulkhead seats without charge. But to upgrade to First Class, there is no deal. The only thing elites get is an expanded window to pay for the upgrade, so they have first crack.
Virgin America’s two tier system is more complex than JetBlue’s very simple offering. With Virgin America, elite members will also get some goodies like discount coupons for future flights, waived fees, and special partner deals as well. But the result in the same.
Rationale
In the end, both of these require more spend for fewer benefits than with elite programs at legacy airlines. And you know what? That seems smart. These guys both have better onboard products domestically anyway, so they should be trying to get a premium. For those who like to spend as little as possible and get a lot for free, this isn’t going to be that attractive. But no airline should really care about those people anyway.
The point is to cater to road warriors. They’re going to be traveling anyway and paying a fair bit for it. For them, the most important thing is to reduce the hassle. Adding dedicated customer service, front-of-the-line passes, and more liberal policies might just reduce the hassle enough to make it worth shifting business where it might not make sense today. At least, that has to be the hope. Otherwise, these airlines are just throwing away benefits and adding complexity for nothing.
