Virgin cuts ties with BP as Qantas primes the (petrol) pump

With Qantas is gearing up to launch its new frequent flyer partnership with BP in early 2020, Virgin Australia says the current Velocity-BP alliance will end as of 31 January.

However, the actual wind-down will begin next week as BP service stations begin to remove their stock of temporary Velocity membership cards, which let customers instantly and effortlessly join the Velocity rewards program.

Virgin’s exit from the five-year relationship follows tentative approval of the Qantas-BP partnership by the Australian Competition and Consumer Commission, which expects to make a final determination in February 2020.

The new Qantas-BP partnership has received a tentative green light from the ACCC.

“We consider that these arrangements will provide public benefits, for example by giving consumers more opportunity to earn and use rewards program points,” says ACCC Commissioner Stephen Ridgeway.

“We don’t think the planned arrangements will have any significant negative impact on competition.”

“Qantas has the biggest loyalty reward scheme in Australia in terms of member numbers, and BP is a major petrol retailer. However, there are many retailers, petrol and non-petrol, that could participate as partners in other loyalty programs.”

The points-for-petrol alliance will also see BP Plus fuel cards “become the exclusive fuel partner" of the Qantas Business Rewards program, with the ACCC granting interim authorisation for this to begin on 1 February 2020. 

How the Qantas-BP partnership will work

Qantas’ points-for-petrol play will launch in early 2020 alongside the newly-minted BP Rewards loyalty program, with customers able to earn Qantas Points when buying petrol, drinks or snacks at one of 1,400 BP service stations around Australia.

BP Rewards is similar to the BPme Rewards program already running in the UK and USA, but reportedly “tailored for the Australian market.”

BP's Qantas hookup will tie into the petrol company's new BP Rewards program.

BP customers will earn BP Rewards Points for every litre of fuel they buy and every additional dollar they spend at a BP service station.

While the scheme’s Australian earning rates have yet to be revealed, BPme Rewards rates in the UK for example are set at one BP Reward Point per litre of Regular fuel and two BP Reward Points per litre of Ultimate fuel, plus one BP Reward Point for every additional £1 spent on goods at the outlet.

The Australian scheme will let customers choose to either earn BP Rewards points, which can be applied as a cash discount at BP outlets – as a reference point, the 'exchange rate' in BP's UK scheme sees 200 points redeemed as £1 – or to earn Qantas Points directly.

“Drivers spend thousands of dollars on fuel each year, our partnership with BP is an easy way for frequent flyers to earn points and get closer to their dream trip,”says Qantas Loyalty CEO Olivia Wirth.

Does Virgin have another petrol partner in the wings?

While there was speculation that Virgin Australia would seek to sign up another petrol outlet as a Velocity partner, no movement has been reported on this front.

As previously reported, Virgin Australia earlier this month assumed full ownership and control of the Velocity Frequent Flyer program after buying back the 35% stake held by Affinity Equity Partners for $700 million. Affinity bought into Velocity in 2014 for $335 million, with then-CEO John Borghetti saying the deal would allow Virgin to “accelerate the program’s strategy and realise its full potential as a world class loyalty business”.

“The strategic relationships that Affinity Partners is going to bring to the deal, we couldn’t buy that. It will give us a truly what I would call eventually a new standard of loyalty program that far exceeds our current boundaries both geographically and from a strategic point of view.”

David Flynn

David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.