Virgin Australia on verge of collapse: What it means for your Velocity points
COVID-19 has hit Australian businesses hard and amongst its victims is major airline Virgin Australia.
This morning, Virgin Australia put out an ASX announcement that said the company will enter voluntary administration.
Prior to the spread of the coronavirus, the airline was already facing financial trouble and had been cancelling a bunch of overseas flights.
The pandemic gave it the final push it needed to tip it over the edge.
Naturally, with the fate of Virgin Australia looking so grim, questions around the airline’s frequent flyer program, Velocity, have shot to the surface.
Customers have found themselves asking: what will happen to my Velocity points if Virgin Australia goes under?
Unfortunately, there is no simple answer.
In the same ASX announcement, Virgin said that “Velocity Frequent Flyer, while owned by the Group, is a separate company and is not in administration,” meaning points are safe, for now. But there has been no indication what it means for the future of the program.
And without the back-up of an airline, customers won’t be able to redeem their points for flights or upgrades, which, as many frequent flyers know, is often the most value-for-points way to spend them.
Currently on the Mozo database, there are 65 rewards credit cards that use Velocity points to convert flight rewards, including cards offered by Westpac, ANZ, CommBank and NAB.
What should I do with my Velocity points?
Over the past few weeks, some Velocity customers transferred their points to Singapore Airlines (who is in partnership with Velocity), while others redeemed them for store gift cards.
However, while customers are still able to earn points, the Velocity online store has now paused points redemptions, which will be in place for at least the next four weeks.
Points will not expire during this period, and Virgin will be extending the expiration period of existing points.
So, the unfortunate truth is, all Velocity customers have no choice but to sit tight and see what happens as updates are announced.
Will my Velocity points disappear?
At this point in time, there is no knowing what the future of Velocity points entails, however having your points vanish is still a possibility if history were to repeat itself.
Cast your mind back to 2001 when Ansett Australia went into administration, customers’ point balances vanished almost instantly.
However, when you look at more recent events, like when AirBerlin filed for insolvency back in 2017, Etihad eventually snapped up the airline’s loyalty program TopBonus, which allowed customers to use their points up a few months after AirBerlin went bust.
Some airline experts have predicted that a similar situation may occur in the case of Velocity, or that banks may get their hands on the program instead.
But there have been no official announcements yet.
Need to reconsider your current rewards program? Take a look at what other rewards credits cards are on offer below or jump over to our rewards credit card comparison tool.
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