Virgin Australia: Velocity frequent flyer points frozen
Now that Virgin Australia has gone into voluntary administration, the airline’s Velocity frequent flyer program has been frozen.
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After Virgin Australia’s fall from grace into voluntary administration, more than 10 million Australians are wondering about the future of their Velocity frequent flyer points.
While Velocity Points is a separate company to Virgin Australia, the program’s members have been told their points will be frozen indefinitely.
An email sent to members on Tuesday morning stated while Velocity was owned by the Virgin Australia Group, it was a separate company and not in administration.
However, Velocity has been forced to make the “difficult decision to pause all redemptions for an initial period of four weeks, effective immediately”.
Essentially, this means Velocity members will not be able to redeem any points for rewards during the pause.
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“We know how much you love to plan your travel and use your Points to redeem flights, however the ongoing travel restrictions and reduced flights have limited the options for you to use Points for flights,” the email read.
“We’re seeing more members use Points to shop online for items such as gift cards, electronic goods, and wine. This unexpected demand has made it difficult for our suppliers to provide these offers and limits the availability for all members to redeem their Points.”
Despite the freeze, Velocity says members will still be able to earn points and individual balances will not be impacted during this administration period.
Speaking to media on Tuesday, Virgin Australia CEO Paul Scurrah assured members that points for Velocity members would be preserved.
“They (Velocity Points) have not been lost,” Mr Scurrah said.
“It is a very valuable part of the group and it is the intent that that forms part of the restructuring proposal as we go forward.
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“There is no intent at this stage to sell that part of group, and while there may be some of those abilities to access points or a pause for a period, it is around preserving value in that business, but that business is well structured, it has a trustee, a separate CEO and we’ll be working with them as we go through this process.”
Adele Eliseo, Frequent Flyer expert and founder of the Champagne Mile said that while the situation looks grim for members, it’s unlikely the program will simply fold.
“With over 10 million members, the Velocity Frequent Flyer program is a highly profitable arm of Virgin Australia,” Eliseo told news.com.au.
“It won’t necessarily disappear, even if the airline goes bust.
Ms Eliseo said members should be prepared to see a change in redemption offers and possibly their point value in the future.
“Unfortunately, the Velocity Rewards Store, Velocity Hotels and Velocity Wine websites have been disabled and are no longer accepting redemptions” Ms Eliseo said.
“Transfers to the Singapore Airlines KrisFlyer program remain off limits, with this option closed to members several weeks ago.
“I expect that the Velocity loyalty program will continue to operate in some form, even if Virgin Australia the airline folds. However, members should be prepared to see a points devaluation and changes to redemption options.”
Virgin Australia’s decision to enter voluntary administration comes after the Federal Government refused a $1.4 billion bailout to help the airline survive the coronavirus pandemic. The group has enlisted accounting firm Deloitte as administrators to help the troubled carrier restructure amid a $5 billion debt pile and a collapsed cash flow due to the coronavirus crisis.
“The events of the past 24 hours have been incredibly challenging for the wonderful people of the Virgin Australia Group,” Mr Scurrah said.
“It has been a necessary decision made by our board, brought on by an unprecedented global pandemic, COVID-19. This is not just something that is hurting Virgin Australia. We know it’s hurting the industry globally and is the worst aviation crisis we’ve ever seen in our history. We’re not immune to that.
“Our board made a very courageous decision last night to put the company into voluntary administration and do so quickly, with the intent of working with our administrator, Deloitte, to come through and be as strong as we possibly can on the other side of this crisis.”
Mr Scurrah said the board’s quick decision to enter administration would help ensure its return.
“We’ll come back leaner, stronger and fitter and play our role in making sure that the economy of Australia – which is currently devastated by the impact of COVID-19 – recovers as quickly as it possibly can for all Australians,” he said.
“We’re very focused on making sure we preserve as many jobs as we can to provide as many jobs for the existing Virgin Australia Group workforce.”
About 16,000 jobs are left in limbo; however, the administrators say there are no plans for redundancies.
– with Lauren McMah
Originally published as Virgin Australia: Velocity frequent flyer points frozen