Some Australian frequent flyers are getting nervous about their Velocity points, after Velocity Frequent Flyer started blocking point transfers to the Singapore Airlines KrisFlyer program. The loyalty program of Virgin Australia has also started imposing limits on gift card redemptions from the Velocity rewards store.
Transfers between Velocity and KrisFlyer suspended
On Friday evening, Velocity Frequent Flyer and Singapore Airlines KrisFlyer removed the ability to transfer points and miles between the two programs without warning. This feature has been suspended in both directions, with both airlines saying that it will return “once flight schedules return to normal”.
Although this is a disappointing change, it doesn’t come as a surprise to some Australian frequent flyers. Some Velocity members had transferred large point balances over to the KrisFlyer program in recent weeks in anticipation of possible changes. Cashing out Velocity points for KrisFlyer miles costs Virgin Australia money – something that is in short supply right now.
You can join the discussion about this topic on the Australian Frequent Flyer forum: Virgin has stopped the transfer of points to Krisflyer
New limits on Velocity gift card redemptions
Last Friday, Velocity also started imposing limits on gift card redemptions via the Velocity rewards store.
Some AFF members have also noticed that some gift cards, such as Coles Myer vouchers, are no longer available. But this issue does not appear to be unique to Velocity Frequent Flyer.
Redeeming frequent flyer points for gift cards is normally poor value, and something we generally don’t recommend. But with no end to the COVID-19 travel restrictions currently in sight, it seems more people than usual are deciding to burn their points on the ground.
Why has Velocity made these changes?
A Velocity Frequent Flyer spokesperson told Australian Frequent Flyer that it has recently noticed a significant change in redemption behaviour.
“Over the last few months we haven’t seen the amount members are redeeming change however we have seen the redemption behaviour change from flights towards sporting goods, gift cards, wine, electronics and merchandise,” the Velocity spokesperson said.
“This is a result of the unprecedented COVID-19 pandemic and increased travel restrictions, and shows the strength of offering a diversified rewards program.
“Given the significantly reduced flight schedules, Singapore KrisFlyer and Velocity Frequent Flyer programs are temporarily suspending conversion of Points and Miles between the two programs. This program feature will recommence once flight schedules return to normal.”
In many ways, these decisions are understandable in the current climate. But Velocity Frequent Flyer must surely realise that making these kinds of changes without warning could also spook some members. The last thing that Virgin needs right now is members rushing to redeem their points outside of the airline’s ecosystem because they’ve lost confidence in Velocity Frequent Flyer. But these changes – which are specifically designed to prevent this – could have the reverse effect.
The fact that no warning was given about these changes is also concerning because it could violate Velocity Frequent Flyer’s own terms & conditions.
According to section 1.4 of the Velocity terms & conditions, Velocity will give members at least 30 days’ notice by email of significant program changes within its control. Where changes are beyond Velocity’s control, it will “try to give you notice of these changes on the Velocity website before they start applying”. Neither of these things happened; in fact, Velocity still hasn’t provided notice to its members of the KrisFlyer or gift card changes. The news has been spread instead by the media and on forums such as Australian Frequent Flyer.
Meanwhile, section 5.2 of the Velocity Frequent Flyer terms & conditions still states that members can transfer their Velocity points to KrisFlyer, subject to the usual rules.
We asked Velocity Frequent Flyer about this, and they told us that the change was implemented due to the COVID-19 crisis, which is beyond their control. The Velocity spokesperson added that it is only a temporary change, and that they are “absolutely committed” to the partnership with Singapore Airlines and the KrisFlyer program.
Virgin Australia may not survive without government intervention, analysts warn
There is no evidence that Velocity points are in immediate danger, and we are not suggesting you should rush to cash out your points. If the Australian government agrees to bail out the airlines, there may be no cause for concern after all.
But, like many airlines around the world, Virgin Australia may not have enough cash reserves to survive an indefinite the COVID-19 shutdown unless the government intervenes. Analysts have predicted that Virgin could have around six months left to find a solution.
Many Australians will remember losing their Ansett Global Rewards points when Ansett collapsed in 2001. There are many reasons that the current circumstances in the Australian aviation industry are different. But for some, it’s a case of “once bitten, twice shy”.
Virgin Australia’s CEO, Paul Scurrah, has reportedly asked the federal government for a $1.4 billion loan to secure its future. But it is not yet clear whether the government will step in to save Virgin Australia. If it doesn’t, Scurrah warns that the Australian aviation market could revert to a Qantas-controlled monopoly – an outcome that isn’t good for anybody.
There is a lively discussion about Virgin Australia’s financial situation on the Australian Frequent Flyer forum.
Many other airlines around the world are in a similar position. However, some governments have pledged strong support for their national airlines. Those government-backed airlines are generally at lower risk of collapsing.
Although many of Australia’s regional airlines are currently fighting for survival, Qantas appears to be in a relatively good financial position at the moment, having just secured $1.05 billion in additional debt funding. Some analysts predict Qantas could last another 11 months of this crisis without government assistance. Recent cost-cutting measures, including standing down workers, cutting back on in-flight catering and switching off wifi & in-flight entertainment on Qantas planes will help with this.
Join the discussion on the Australian Frequent Flyer forum: Is it Time to transfer/withdraw points from Velocity?