Many frequent flyers have been watching the news about Virgin Australia nervously this week. As the airline suspends share trading and considers voluntary administration, the question on everybody’s mind is: “Should I be worried about my Velocity points?”
For now, the future of Virgin Australia really depends on whether it gets a lifeline from the federal government. Prime Minister Scott Morrison has not ruled this out, but said yesterday that any support given to airlines would be industry-wide. Morrison also acknowledged that the government appreciates “the value of two competitive viable airlines in the Australian economy”.
If Virgin Australia receives the $1.4 billion loan it has been lobbying for, the airline could be saved. Under this scenario, Velocity Frequent Flyer points should also be safe (at least, for now).
But even if Virgin enters voluntary administration, this doesn’t necessarily mean that you’ll lose all of your Velocity points… like what happened to Global Rewards points when Ansett collapsed. On Tuesday, Velocity Frequent Flyer sent an email to members to reassure them that “Velocity is set up in a way that safeguards member value by having a trustee that looks after the interests of members”.
There have also been rumours that Velocity Frequent Flyer, which is profitable and an attractive asset to potential buyers, could eventually be sold to a third party.
However, that doesn’t necessarily mean that your points won’t lose any value if Virgin was to collapse. History tells us that, when frequent flyer programs outlive the airline they were associated with, the points often become less valuable. This is what happened to the Airberlin Topbonus loyalty program. Topbonus miles still existed on paper after the bankruptcy of Airberlin in 2017, but they were no longer redeemable for Airberlin flights and their nominal value became just a fraction of the miles’ previous purchasing power.
So, should I redeem my Velocity points now?
This is entirely up to you.
If you think Virgin Australia will survive this crisis – and with government support, that may well be the case – you can of course leave your Velocity points right where they are. If you’re willing to take that risk, you could be rewarded too. If Virgin does fly again, you’ll once again be able to redeem your Velocity points in the air – and potentially get much better value for your points than you could if you redeemed them now.
The value of a frequent flyer point is not fixed. The chart below shows the value of one Velocity Frequent Flyer point, depending on how it is redeemed. As you can see, the average “value” you get for each Velocity point is far higher when redeeming for flights and upgrades:
If you do want to cash out your Velocity points now, the options are unfortunately limited. Velocity already suspended transfers to the Singapore Airlines KrisFlyer program two weeks ago. Gift card redemptions are now limited to one per day, too.
For a while, Virgin had even removed all Reward Seat inventory for all Virgin Australia flights from its website. But, as of Thursday evening, Reward Seats are available again.
What Velocity redemptions are currently available?
If you would prefer to cash out now, there are still some rewards available.
You could redeem your Velocity points to book a flight on Virgin Australia or a partner airline, but this might be risky. For starters, we don’t yet know when state and international borders will re-open. It’s also not clear whether award bookings would still be honoured if Virgin – or the operating partner airline – was to collapse before you’re booked to fly. But, if you feel like taking a risk, you could still book a flight for later this year or early next year. It’s possible to redeem Velocity points for travel up to 11 months in advance.
Most gift cards and products from the Velocity rewards store are still available. You’ll get around half a cent worth of value from each Velocity point if you choose to redeem for things like vacuum cleaners or toasters. That’s not outstanding value, but better than nothing.
Unfortunately, you aren’t the only person to be thinking about panic-buying a fancy juicer. (Even the Betoota Advocate, a satirical news website, has weighed in on this!) Yesterday, the Velocity rewards store website was running very slowly – at times, even crashing – due to the high volume of traffic. Many Australian Frequent Flyer members have also complained that their orders – even from 1-2 weeks ago – are still listed as “pending”.
Another option is to purchase wine from the Velocity Wine Store. The wine store also advises of delays in shipping orders “due to high demand”. But you’ll get 0.625 cents per Velocity point worth of value, and there are some very good wines available.
If you want to redeem your Velocity points now, and you like wine, the Velocity Wine Store could be an option for you. But beware that you must have enough Velocity points in your account to pay the full amount for any purchases – including the delivery fee.
What do you make of all this? Join the discussion on the Australian Frequent Flyer forum: Is it Time to transfer/withdraw points from Velocity?