Why Virgin’s $315m loss is bad news for frequent flyers
Fewer flights equals fewer rewards flights, folks.
Virgin Australia has posted a $315 million after-tax loss for the 2018/2019 financial year, which is going to lead to drastic changes at the airline.
It's really bad news for the 750 staff earmarked for redundancy.
It's also likely to lead to a reduction in the number of frequent flyer seats offered through Velocity.
In its results announcement, Virgin said it had cut capacity by 1.5% during May and June, and it expected further cuts this calendar year.
CEO Paul Scurrah said the airline would have a "tight focus on capacity management" going forward.
That's airline speak for "we're going to drop flights if we can't make money out of them".
"The Group intends to further reduce flying across elements of its short-haul international and domestic network to meet demand and maximise route profitability, and expects H1 FY20 capacity growth to be negative," its results announcement said.
In a similar vein, a focus on cost-cutting at Virgin subsidiary Tigerair has already meant a lot fewer bargain fares.
Bottom line: if there are fewer flights, there will be fewer opportunities to redeem reward seats.
Frequent flyer is a relatively bright spot for Virgin, with Velocity itself seeing an 11% rise in profit. There are now 9.8 million members, up from 9.1 million the previous year.
So what does all this mean for points enthusiasts? Even with a slightly reduced palette of flights, Virgin still remains a solid choice. And right now, there seems to be no threat to the longer-haul options (Los Angeles and Hong Kong), which are popular reward flight options.
As well, Virgin has a wide range of airline partners (even though it's not part of one of the major global alliances) and plenty of credit-card earning options.
Redeeming flights has always required planning and patience.
Angus Kidman's Findings column looks at new developments and research that help you save money, make wise decisions and enjoy your life more. It appears regularly on Finder.
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