Virgin Australia Into Administration: What Happens To Your Velocity Points and Credit

By Josephine Gunther | April 23, 2020

Voluntary administration” may be an unfamiliar term for many Australians. It is a term that has come up a lot recently, in wake of the news that Virgin Australia has entered voluntary administration. With this unfamiliarity comes the uncertainty of your exisiting Velocity Frequent Flyer points and credit vouchers for cancelled flights. You may be wondering what happens to them now. Let’s take a look.

Does voluntary administration mean that Virgin Australia has collapsed?

The short answer: No.

Virgin Australia announced that they are going into external administration on Tuesday, after failing to secure a $1.4 billion government loan to save them from a huge $4.8 billion debt.

Virgin Australia announced that they are going into external administration. Source: Herald Sun

This means that the company has realised that they are now unable to meet their debts, and if this is the case they will no longer be able to trade legally. Due to failing to secure a government bailout loan, the directors of the company have had to get insolvency practitioners to act as administrators, who will step into the director’s role with additional powers to get rid of unnecessary contracts or property.

Due to these negotiations, the airline is still able to keep Virgin aircrafts flying for the maintenance of freight corridors, the transport of essential workers, and the return of Australian residents during the global pandemic.

The intention of the company is to restructure the business and remould their finance model, where they will then, hopefully, be able to come out of administration. It is not known how long this will take.

What happens to my travel credits?

The good news is that if you have existing travel credits from cancelled Virgin Australia flights, these should currently remain valid.

With uncertainty looming around the future of the Australian aviation industry, however, it may be wise to check your travel insurance policies.

Will I still be able to use my Velocity points?

The good news: Velocity Frequent Flyers is a separate company to Virgin Australia and, therefore, is not currently in administration.

The bad news: With more than 10 million members and without an airline attached to it, it is possible that Velocity points may disappear entirely.

Ansett Australia went into administration in 2001 and with it went point balances of an estimated $700 million. While the companies are different and times have changed, it is possible that history may repeat itself.

Virgin Australia has joined Ansett Australia, an airline that went into administration in 2001. Source: Dean Lewins, AAP Image

Currently, the Velocity rewards program has been frozen, and will continue to be for four weeks. This is likely due to the store crashing after people were trying to desperately redeem their points, following the announcement that Virgin was going into administration.

“We’re seeing more members use points to shop 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,” Velocity shared in a statement. “We’ve made the difficult decision to pause all redemptions for an initial period of four weeks, effective immediately. This means members won’t be able to redeem their points for rewards during the pause.”

“We will continue to assess a range of options for the program and we want that to include a continuation of our long-standing partnership with Virgin Australia,” the company continued. “Although the initial timeframe for this restriction is four weeks, this period may be extended. We will come back to you with an update as soon as we can.”

It has also been stated that the points will not be getting wiped and that they will not expire during the four-week freeze.

The administrators for Virgin Australia will need to consider the options before making a decision regarding the outcome of Velocity flight points.

In the meantime, it is a waiting game.

If you are currently struggling with the news and wondering what to do with your flight credit or Velocity points, the best thing to do right now is not get too emotionally invested. Continue to shop for bargains during this period, and prepare for the potential future loss of accumulated points.

This content was provided to MentourPilot by provider, Travel Radar Media. Travel Radar offers high quality content in partnership with Mentour

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