BP switches to Qantas loyalty scheme in blow to Virgin

Service station giant BP has switched airline loyalty schemes and joined forces with Qantas, in a blow to Virgin Australia at a time it is trying to find new investors for its frequent flyer business.

BP will announce on Wednesday it has signed Qantas as the core partner in its own loyalty scheme to be launched early next year, which will allow customers to earn Qantas points on fuel and other purchases.

The fuel giant, which has about 14000 outlets stations in Australia, is one of the major partners in Virgin’s Velocity loyalty program, along with the Wesfarmers and Coles’ flybuys program.

But the partnership has not been a happy one, with BP trying to terminate the arrangement in 2017 after it agreed to buy and operate Woolworths’ network of fuel stations, which had a tie up with Qantas, in a disagreement that ended up in court.

The Australian Competition and Consumer Commission (ACCC) eventually blocked the Woolworths sale and the supermarket has since sold its 540 service stations to the British group EG.

A Virgin Australia spokeswoman said Velocity members could continue to earn points at BP for the time being, as well as at its more than 90 partners and 300 brands.

“We’ve recently announced new partnerships with global rideshare company Ola, Freedom, Freedom Kitchen, Snooze, and Expedia, with more to come,” she said.

Virgin is looking for a new joint investor in its Velocity loyalty scheme because its co-owner, private equity firm Affinity Equity Partners, wants to sell its 35 per cent stake.

An initial public offering for the business is also on the cards. Virgin has said it intends to keep a majority stake in the scheme, but has left the door open to reducing its share from 65 per cent to raise capital and help with its turnaround plan under new chief executive Paul Scurrah.

Velocity made almost as much money as Virgin’s domestic airline business last year ($122 million versus $133 million), while Qantas’ loyalty business made more than both Jetstar and Qantas International.

BP and Qantas have not released their point earn rates for the partnership, which will also extend to the airline’s Business Rewards scheme. The deal needs to be approved by the ACCC.

A Qantas spokeswoman said loyalty members would still be able to earn points at Woolworths’ co-branded Caltex services stations on Woolworths Rewards cards and convert them to Qantas points.

 

Extracted from The Sydney Morning Herald

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