Value of Virgin Atlantic flying club miles

Flying Club is the name of Virgin Atlantic’s frequent flyer program. One of the challenges of valuing this program is that mileage requirements for free flights vary by specific departure location, requiring a more city-to-city analysis. For example, it costs 50,000 miles (standard rate) to fly from LAX to Heathrow, but only 45,000 miles if you fly out of New York. Most other airlines have a simpler system where is costs, for example, the same amount of miles to fly from anywhere in North America to anywhere in Europe.

Key Assumptions in Valuing Virgin Atlantic’s Flying Club Miles

As in all of GetDebit’s analyses, there are some critical assumptions we must make:

  • Virgin Atlantic is a London-centric airline–all flights route through London. Thus, Asian routes make absolutely no sense from the US, since you are essentially flying the wrong way for a good part of the trip. For the market price of tickets, we rely on GetDebit’s Detailed Analysis of Flight Costs.
  • Virgin Atlantic has a very unusual (and unfortunate) tax structure, which we treat separately below, and which requires an adverse adjustment to the value of Flying Club Miles.
  • Virgin Atlantic is having a Flying Club mileage sale to London. The reductions in mileage requirements are significant. For example, it normally costs 45,000 miles to fly from NYC to Heathrow, but only 25,000 during the sale. It’s unclear how long this sale will continue, though it could go through the end of the year. For this post, we analyze both the sale and non-sale value of the miles, but for the Plastic Ranking Engine we currently have the non-sales values loaded, since the Engine is designed to make long-term card recommendations.
  • Virgin Atlantic also flies to some other locations that GetDebit normally doesn’t include in it’s analysis, such as Cape Town (South Africa), and Dehli (India), to name a few. We observed that the schedules for these flights are generally far less convenient (ie more time in the air or on transfers) than if you went on the open market. Given that these are generally more “exotic” routes and also taking into account the scheduling issue, GetDebit has decided to exclude these routes from our analysis.
  • This leaves us analyzing only one destination—London! However, Virgin Atlantic also has 16 Flying Club airline partners which significantly extend the reach and value of the Flying Club program. Specifically, we analyze 4 of their major partners, including US Air, Singapore Air, Continental, and ANA.

Virgin Atlantic’s Unusual (and Unfortunate) Tax Structure

Thanks to a recent contribution from a GetDebit participant, I was alerted to Virgin’s extremely unusual tax structure, where the tax on their tickets is basically 3 times greater than for basically every other airline I have come across. I am still trying to determine what exactly goes into their tax structure, and will update this post accordingly once I have that information. In the meantime, check out the table below. Note that their partner airlines generally don’t suffer the same fate.

As you can see, Virgin’s taxes are about $220 higher than the other major airlines…But this shouldn’t matter, since you’re getting the ticket for free from an award anyway, right? Wrong! Written into the fine print of essentially all frequent flyer programs is the fact that you, the redeemer, are responsible for all taxes. So all of a sudden a supposedly near-free reward ticket from NYC to LHR is going to cost you at least $350. Ouch! Talk about devaluing the worth of the program.

Example of Virgin Atlantic’s Aggressive Tax Structure: Flying NYC to London (LHR)
Airline Tax
AA $127
Delta $125
Continental $125
Virgin Atlantic $347

So How Much Are Flying Club Miles Actually Worth?

Firstly, let’s analyze just the value of using Flying Club miles on Virgin Atlantic itself. We’ll then extend the analysis to the 4 major partner airlines (and one hotel chain) for the complete picture!

Estimating the Monetary Value of Virgin Atlantic’s Flying Club Miles (Economy Class, RT)
From To Mkt ticket price Adj for VA taxes Miles Req’d (non-sale) Miles Req’d (on-sale) Travel % Allocation $ Value/Mile Weighted (non-sale) $ Value/Mile Weighted (on-sale)
Los Angeles(LAX) London(LHR) $550 50,000 40,000 33% $0.0037 $0.0046
NYC(NYC) London(LHR) $342 45,000 25,000 33% $0.0025 $0.0046
Chicago(ORD) London(LHR) $461 50,000 35,000 33% $0.0031 $0.0044
Total Pre-Penalty $0.0093 $0.0135
Total Post-Penalty $0.0088 $0.0128

Valuing Virgin Atlantic’s Flying Club Partner Program

Now that we have an idea of what a mile might be worth when redeemed on Virgin Atlantic itself, it’s time to view the holistic picture and include partner valuations.

How Much Are Flying Club Partner Miles Worth On Partner Airlines (Economy Class/RT)
Partner Exchange Rate $ val/mile (post-penalty)
Virgin Atlantic N/A $0.0088
ANA High season $0.0124
Continental SaverPass $0.0119
US Airways MileSaver $0.0102
Hilton Hotels 1:1 $0.0043
Avg of 4 airline partners $0.0113

Summarizing GetDebit’s Thoughts on the Value of Virgin Atlantic’s Flying Club Program

Thus, you can see that while Virgin Atlantic’s Flying Club miles are only valued at around $0.0088 on a standalone basis, the key turns out to be also estimating the value of Flying Club miles when used to redeem awards on partner airlines. Once taking this into account, the value of the miles shoots up to at least $0.0113 (even higher if you can fly ANA or Continental more frequently). Check out GetDebit’s Frequent Flyer Mileage Valuation Comparison to see how the Virgin Atlantic Flying Club Program stacks up against other frequent flyer programs.

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