Virgin Blue has promised every seat on every flight would be available to frequent flyers on its new loyalty program, launched toward the end of last year. Virgin Blue made the announcement on the 85th birthday of its rival Qantas.

The program, called “Velocity,” features non-expiring points and free enrollment (Qantas charges Australian residents for membership in its Frequent Flyer program).

Virgin Blue is hoping to enroll at least 1 million members in 2006.

The program is revenue-based, offering six points for every dollar spent on travel or using a new National Australia Bank Visa card. Virgin Blue’s most popular route, from Melbourne to Sydney, would “cost” 16,800 points for a roundtrip. A Sdney to London jaunt will run 120,000 points.

Virgin Blue guarantees seats can be redeemed on any flight on a first-come, first-served basis.

Virgin Blue has also partnered with international airlines Emirates and Virgin Atlantic, as well as car rental company Europcar, as part of its offering.

The Velocity program is designed to compete directly with Qantas’ well-established Frequent Flyer program, and follows a series of recent initiatives at Virgin Blue including Web-based check-in, self-service check-in kiosks and new fares for business travelers.

The Virgin frequent flyer program threatens to hurt Qantas, which is fighting a strong competitive battle with a number of airlines to defend its declining international customer base.