Virgin America Rewrites (Some) Mileage Program Rules

More than a year after launching its frequent flyer program, Virgin America is finally allowing its 500,000-plus Elevate members to cash in their points for free flights.

That's certainly a milestone for Elevate members. Is it a milestone for airline loyalty programs, as Virgin America claims?

The program has two features which make it a potential game-changer. First and foremost, awards are free of the blackout dates and other capacity controls that so frustrate members of other programs. If there's an unsold seat, an Elevate member has as much chance of booking it for points as a paying passenger has of purchasing it.

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Secondly, rather than earning miles according to the distance flown, Elevate members earn points that reflect the price paid for their tickets: five points for every $1 spent. And the number of points required for award tickets rises and falls with the ticket prices for the same flight, reflecting supply and demand.

The combination of unrestricted awards and value-based earning and redemption is undoubtedly a welcome step in the direction of fairness and transparency.

Virgin America also gets high marks for its award booking application. Would-be travelers enter their desired itinerary and can simply toggle back and forth between screens showing the price in points and in dollars.

So there's a lot to like about the innovative approach and easy-to-use booking app. How does Elevate perform in terms of actual value delivered to consumers?

Since award prices are dynamic, reflecting supply and demand at the time a booking is made, the program's return on investment is variable. Test-booking a flight between LAX and JFK in early November, for example, showed coach seats available for 6,930 points each way.

The coach fare for the dates in question was $149 each way, so, with an earning rate of five miles per $1 spent, it would take 9.3 round-trip flights to earn the 13,860 points required for a round-trip award ticket. That's decent if unspectacular value, enhanced to some extent by the no-blackout availability.

To snag a first-class seat on the same flights would cost either 48,558 or 56,930 points each way, depending on the flight departure time, for seats that sell for $1,044 or $1,224 each way. Once again, that amounts to getting a free flight after buying 9.3 tickets.

The situation turns decidedly negative when considering the program's lack of earning opportunities and points that expire after just 18 months.

While an affiliated credit card is in the works, for now members can only earn points for flights on Virgin America's very limited network. How many travelers can realistically expect to fly on Virgin America more than nine times within 18 months? Very few. So it's misleading to promote this program to average travelers, most of whom have no chance of ever earning a free ticket before their points expire.

The analogy that comes to mind is from the automotive world: Terminating Elevate points after just 18 months is like putting a two-barrel carburetor on a Ferrari. It looks great on the surface, and boasts some desirable components under the hood. But its performance is degraded by a single bad design choice.

The good news is that it's a fixable problem. Moreover, it's a program worth fixing. But until Virgin America addresses the expiration issue, Elevate won't live up to its name.

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