Virgin Australia starts selling new “Fares for You”

First unveiled in mid-August, Virgin switched over to these new fares on Thursday.

There are five fare categories for domestic bookings. Three are for economy – Getaway (least flexible), Elevate, Freedom (most flexible), and two are for business – Business Saver and Business.

Previously, Virgin had two economy fare categories – Saver and Flexi – alongside a business fare.

In terms of what impact “Fares for You” has had on pricing, an initial comparison for domestic fares on three routes showed Getaway and Elevate prices were roughly in line with, or a little above, where Saver fares were previously, while Freedom has been pegged at Flexi prices.

For example, on the popular Sydney-Melbourne route, the Virgin website on Tuesday showed Saver fares from $125-$289 for travel on September 13, while Flexi fares were $399 and Business $750-$899 for all flights that day. On Thursday morning, Getaway fares for the same route on the same day ranged from $149-$155, with Elevate $199-$285, Freedom $399 and Business $750-$899 for all flights on September 13. There were no Business Saver fares available.

For Melbourne-Perth flights, Saver fares ranged from $269-$439, with Flexi at $599 and Business at $1,929-$2,799. By comparison, Getaway was at $269, Elevate was between $319-$439 and Business $1,929-$2,799. Again, there were no Business Saver fares available.

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Finally, a look at Brisbane-Melbourne showed Saver was $169-$229, Flexi was $459 and Business $960. By comparison, Getaway was a bit higher at $189-$195, Elevate was $229, Freedom was $459 and Business was $960. And as with the other two routes there was no Business Saver fares available for purchase.

The new pricing structure suggested Virgin was hoping to entice those who had previously purchased the cheapest Saver fares to pay a bit more for the Elevate fare in order to receive more benefits, given Getaway domestic fares do not earn silver, gold and platinum Velocity members bonus points, while gold and platinum members would not be able to “Fly Ahead” (catch an earlier flight) if they arrive at the airport early.

And from January 30 2017, all Velocity frequent flyer members travelling Getaway domestic fares will earn fewer status credits compared with Saver fares, according to an update on the Velocity website. In some cases, such as for a one-way Sydney-Melbourne flight, the earning rate for status credits – which determine what tier members can attain in the Velocity program – will be cut by half from 10 for a Saver fare to five for a Getaway fare.

On the international front, Virgin is re-introducing a carry-on only fare for its international short-haul network, such as flights to Bali, Fiji and the South Pacific (excluding trans-Tasman routes), called “Go”.

Virgin already offers a seat-only fare for flights between Australia and New Zealand, aligning its product with alliance partner Air New Zealand on trans-Tasman routes.

The airline said in the note to travel agents in August the introduction of “preferred paid seating is part of our greater range of fares across all domestic and international routes to offer guests more choice and flexibility during the booking process”.

Virgin’s Getaway domestic fare with reduced benefits mirrors a trend globally for so-called basic economy fares and followed a similar revamp of the Qantas frequent flyer program in 2014 which led to passengers earning more points and status credits on more flexible, and higher-priced, fares.

In the US, Delta Air Lines was the first to roll out a bare bones economy fare on selected routes, with “Basic Economy” a non-refundable, non-changeable ticket that offered limited frequent flyer benefits and no advanced seat selection. American and United were planning to follow suit with a similar product of their own.

A March 2016 research note from thinktank CAPA – Centre for Aviation said these “branded fares” were an increasingly popular way for the big US network carriers to compete effectively with ultra low-cost carriers such as Spirit and Frontier.

“The introduction of more segmented fares should actually allow American, Delta and United to add more sophistication to their revenue management and avoid dilution of revenue,” CAPA said.

“These fare products aim to create pricing segments which cater to a wide swathe of passengers.”

CAPA cautioned that although these branded fares had the potential to generate billions of dollars of annual revenue for the three large US global network airlines, it created “more complexity in the methods they use to price fares”.

John Thomas, who will join Virgin as group executive for the airline’s domestic and international operations later in September, said Air New Zealand led the industry with the introduction of these branded fares through its Seat, Seat+Bag, The Works and Works Deluxe fares.

“The industry is moving very much towards the branded fares,” Thomas told reporters during Virgin’s business class launch in Los Angeles on July 20.