LifeMiles Safe (For Now) as Avianca Files for Bankruptcy

LifeMiles Safe (For Now) as Avianca Files for BankruptcyColombian airline Avianca has become the latest casualty of COVID-19, voluntarily filing for bankruptcy earlier this week. But the LifeMiles frequent flyer program is safe, at least for now.

LifeMiles is the frequent flyer program of Avianca, a member of Star Alliance. It’s popular among Australian frequent flyers because LifeMiles are often sold at generous discounts, and can be redeemed for heavily discounted Business and First class travel across the Star Alliance network.

Avianca says that the LifeMiles program is administered by a separate company and is not part of the bankruptcy filing. You can continue to earn and redeem LifeMiles as normal.

“LifeMiles members can remain confident that Avianca will continue to honour the LifeMiles program, including rewarding its customers with LifeMiles and accepting LifeMiles as payment for airline tickets, as this is a critical part of Avianca’s commitment to customers and its long-term success,” LifeMiles CEO Matthew Vincett said.

“We want our members to feel confident that their miles are safe,” Vincett added.

In a statement, Avianca reassured LifeMiles members that the frequent flyer program itself is in a sound financial position:

Avianca will continue to accrue and accept LifeMiles as normal during its reorganization process. LifeMiles is a separate business from Avianca, with distinct legal entities, separate shareholders, and its own majority independent governance body. LifeMiles remains well capitalized and LifeMiles’ assets are insulated from Avianca’s reorganization process.

LifeMiles has also set up a news portal for members.

LifeMiles already announced previously that no miles will expire this year, due to the COVID-19 travel restrictions. There is no change to this policy. (Normally, LifeMiles would expire if you don’t earn at least one mile every 12 months.)

Almost all Avianca flights worldwide have been grounded since March due to COVID-19 travel restrictions in South America. But Avianca is continuing to operate throughout the bankruptcy proceedings. The airline says it will resume flights as soon as it is safe to do so, and will honour all bookings & gift vouchers, although it is permanently exiting the Peruvian market.

Avianca is expecting to continue flying and to emerge from this process in a better financial position, similar to the current voluntary administration situation with Virgin Australia.

Should we be worried about LifeMiles?

Given the uncertainty, now is probably not a good time to make new LifeMiles purchases.

If you already have LifeMiles in your account, there’s no need to panic just yet. But it is not yet clear what will happen in the long term.

If Avianca continues to operate flights and remains a member of Star Alliance, it is likely that you’ll still be able to redeem your miles for Star Alliance flights in the future (assuming Australia’s borders re-open at some point). But there is always a small risk that the program could remove the ability to redeem miles for flights at some point. Right now, it’s too early to say.

While some AFF members are worried, others are just happy with the value they’ve been able to extract from the LifeMiles frequent flyer program over the years…

The mere fact the underlying airline was based in Colombia sent 99.999% of any possibly interested parties packing. Nevertheless, since taking my first leap of faith into Lifemiles many years ago I have purchased and redeemed in excess of 3 Million points in long haul First/Business. The value I have gained from these redemptions would be well over $300K AUD (face value) and probably around $150K value to me based on what I would have paid etc etc. My remaining 200K miles is a reasonable sum which I hope I don’t lose, but big picture I’ve done extremely well with LM over the years.

Unlike VFF, I’m actually optimistic about the outlook for Lifemiles. Famous last words eh.

Join the discussion on the Australian Frequent Flyer forum: Avianca on the verge of bankruptcy

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Matt Graham
The editor of Australian Frequent Flyer, Matt's passion for travel has taken him to over 60 countries… with the help of frequent flyer points, of course!
Matt's favourite destinations (so far) are Germany, Brazil, New Zealand & Kazakhstan. His interests include economics, aviation & foreign languages, and he has a soft spot for good food and red wine.

You can contact Matt at [email protected]