Virgin Companion Fares Part 4. Cherry Picking?

After I had finished writing the first part of this series it did occur to me that using the Gatwick – Barbados route may have appeared a little cherry picked, as it has two features that should help the value of the companion fare I was arguing exists. Firstly, it is a low competition, high fare route. In comparison to the Virgin network’s main focus in the continental US, with the carnage that is TATL economy yields at the moment, cash tickets to Barbados are far higher. Also – Gatwick means the departure taxes from the UK are a little lower than most of Virgin’s routes out of Heathrow.

Both criticisms are pretty fair, so I am going to fire up Excel again and delve into to both LHR – New York Kennedy and LHR to San Francisco, to see if my argument still holds any weight on routes that should be unfriendlier to it. I am going to do things slightly differently however, rather than just assuming a mile is worth 1p, for each cash ticket price I will calculate the savings made by using a companion reward in relation to booking two cash tickets, and compare that to the net miles outlay – ie, the mileage cost of the companion reward + the miles not earned from the 2nd revenue ticket – to generate a pence per point value for the using miles at that cash ticket price.

Again, I will be comparing the companion fare to economy classic cash prices, and not light ones. My reasoning remains the same – firstly the mileage ticket can only be booked into Classic so it makes it a fairer comparison, and secondly, that at an extra £100 buy up, the added benefits of seat selection, checked baggage, some flexibility, the extra miles, and the ability to add upgrades later; I remain of the opinion that the vast majority of people should be booking into Classic anyway. [And if you really must fly at the absolute lowest cost, buy into economy light and use a bunch of miles to take 0.6p off per mile – but that’s not a good idea.]

So firstly, New York. Before we get to the graphing let’s just have a brief overview of the price landscape. On Virgin/Delta direct flights, the lowest pricing for Economy Light starts at £273, and that price is widely available outside of school holidays. Therefore Classic is also widely available for £373. OneWorld are also at that price for their Economy Basic product, which is essentially the same as light, but their buy up to normal economy is only £80 return, though I don’t think includes seat selection. United are also pricing from £274 (although it too is fairly well available) with normal economy and seat selection also only an £80 buy up. So, the lowest price seems to be around £350 for normal economy experience you would get on a Virgin mileage ticket. However, at peak times the story is very different. In the first weeks of the Summer School holidays prices are essentially twice as high. For normal Economy its at least £650+, even connecting in Amsterdam or Munich would only bring it down to the high 500s. For reference, the taxes and fees on direct Virgin flown award tickets are £270.

To the pretty pictures then:NYC companion

Takeaways from this are that even at the lowest cash prices on the route, directly comparing to Virgins price of £373, the miles are generating savings of 0.75p per point. Whilst this is not a fabulous redemption by any means – it is certainly around the value many people’s lowest acceptable redemption is at – especially considering that for many Virgin collectors the alternative is avios, and the opportunities to redeem avios at above 0.75ppp seem to decrease daily. Then if we look at the 1pp threshold, it is reached at cash prices at the still very low price of £410 on off peak dates. If you are inside the 21-day advance purchase window for the very cheapest fares it is likely that a companion reward will generate excellent savings. Similarly, if there are peak dates involved, the thresholds for 1ppm are only around £450 and £500 respectively. These are still very low if the peak reward season combines with higher cash prices, for as I discussed earlier, cash prices in the holidays for this set of direct flights will be over £650, “miles” above the threshold.

Next, let’s look at San Francisco, as it fits into the highest band of award costs, and the cash prices are still often affected by the current TATL bloodbath. Outside of school holidays, Virgin pricing seems to start at £304 for Light, £404 for Classic, although that is not widely available and £340/440 is more common. United is offering a more widely available £284/364 combo. American/BA are mostly around Virgin/Delta prices. In the holidays, prices become £800-900 for midweek-midweek or £1200 and up for Saturday – Saturday. The taxes and fees are slightly higher on award tickets at £300.

SFO companion

This one is slightly less positive for the Companion reward. At off peak times, United’s £364 price is too low for the companion reward to compete (assuming you value the 50% distance miles earnable in any number of Star Alliance programs at 1:1 with Virgin miles – if not then this fare should be considered £50 more expensive but that is is still too low to get more than 0.5p per point). However, if you don’t want to fly United, Virgin’s common low of £440 still produces value around the 0.75p mark, which is not terrible. The thresholds for 1ppm at £500/550/600 are all prices which at relatively short notice or shoulder season the cash fares will be above.

One caveat here is a reminder that it is a mistake to see the higher and higher pence per mile value as cash prices increase to think that it means that companion rewards should always be used even as cash prices skyrocket, because that forgets the fixed prices of normal awards tickets. These graphs only show the implied value of the points relative to the using cash, not relative to the cheapest way of booking the flights. At very high cash prices, if 2 reward seats are available then they will be a cheaper method of booking than buying cash tickets, which reduces the saving from using a companion fare, and so reduces the value per mile.

A second caveat is that when using a companion award, the cancellation/changes fees are far lower than on the revenue tickets, which may provide value, but it is very much on an individual basis what that value is. As such, it is not reflected in the maths behind the graphs, although it would mean that the miles are slightly more valuable than their valuation given in this exercise at each price point.

In Conclusion,
– Even with the comically low fares in Economy Light, as long as you were going to book up into classic anyway, you can regularly get 0.75ppm and better using the companion award
– The thresholds for the companion reward way of booking two tickets achieving 1ppm are low enough that any slight increase in cash fares will bring them at or above that level
– This remains true when Peak dates are involved.

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