Virgin Australia under pressure to lift travel credits expiry date

Virgin Australia is under pressure to join Qantas in lifting the expiry date on $120m in Covid-related travel credits beyond December 31.

Virgin Australia is under pressure from the consumer watchdog to extend the life of $120m worth of Covid-related travel credits beyond December 31.

The airline is also holding about $300m in credits issued before the administration period in 2020, which have a hard deadline for expiry at the year’s end.

Credits were provided to millions of customers for travel that was booked and paid for, and then cancelled due to the Covid crisis and border closures

Unused travel credits will simply go towards Virgin Australia’s bottom line, providing a tidy windfall for the carrier.

Qantas recently lifted the expiry date on its $570m in Covid travel credits at the recommendation of the Australian Competition and Consumer Commission.

An ACCC spokeswoman said they would like to see Virgin Australia do the same.

“The ACCC engaged extensively with all three domestic airline groups in relation to a range of consumer issues that arose during the pandemic.

This included providing a guidance for the travel industry recommending that businesses should allow consumers a reasonable period in which to use Covid-related credits,” the spokeswoman said.

“The ACCC encourages Virgin to extend its credit expiry dates for all Covid flight credits to ensure consumers are able to effectively use these credits.”

Virgin Australia confirmed it was reviewing the expiry date on the remaining Covid credits, and would update customers accordingly. The credits represent about 10 per cent of the original $1.2bn worth of bookings.

The ACCC acknowledged that travel credits issued to customers before Virgin Australia entered administration in April 2020 were a special case.

“In such administration processes, the new business is generally able to choose what liabilities of the old business it will or won’t take on,” the spokeswoman said.

“As part of the sale to Bain Capital, it agreed to continue to honour existing Virgin credit notes and the administration process included a federal court decision that endorsed the approach taken to Virgin credits that were outstanding at the time of the administration.”

The ACCC accepted these would expire on December 31, if customers were unable to use them.

Much of the frustration for Virgin Australia customers has been that since the airline emerged from administration, there has been no long-haul flying making it difficult for some people to use thousands of dollars worth of credits.

Adam Glezer from Consumer Champion. Picture: Wayne Taylor

Adam Glezer from Consumer Champion said adding to the difficulty was that Virgin Australia did not allow credits to be used on partner airlines such as United, Singapore or Qatar Airways.

“What is frustrating about this whole expiry date situation is it presents an ultimatum to people who booked flights in good faith two or three years ago,” Mr Glezer said.

“They either lose their money, or travel somewhere at a time when inflationary pressures mean everything is more expensive.”

He said failure to extend the deadline would only confirm what many customers already suspected – the airline did not particularly want people to use their travel credits.

“These Virgin Australia credits are so restrictive it shows what little regard they have for their customers and how it’s all about profits,” Mr Glezer said.

“It suggests people with credits are just an annoyance because they’re not contributing to their current cash flow.”

Virgin Australia had indicated the airline was firmly back in profit although was yet to provide details.

Owners Bain Capital had been expected to undertake an initial public offering this year, to raise $1bn but there was now a view that would be pushed into 2024 amid market uncertainty.

At the CAPA Centre for Aviation summit in Brisbane last week, Flight Centre managing director Graham Turner said it appeared the window of opportunity had passed.

“There’s a bit of consensus in the market that they feel (Virgin) might’ve missed their slot to do it,” Mr Turner said, adding he did not think he would personally buy Virgin shares.