Virgin Australia Flight Credits Useless to Overseas Residents

More than 300,000 Virgin Australia customers have now received Future Flight credits for cancelled flights. But many Virgin customers have complained they would have preferred a refund. This is especially the case for customers that had purchased expensive international business class tickets, and now have Future Flight credits worth thousands of dollars that can only be used on Virgin domestic flights.

But if you live in Australia, you may at least have an opportunity to redeem your Future Flight credit by booking domestic flights. Spare a thought for customers living overseas – for example in New Zealand, Japan or the United States – who had booked Virgin Australia tickets before the company went into administration. Not only are Virgin’s overseas customers now hundreds or thousands of dollars out of pocket, but they have no realistic prospect of using their travel credits anytime soon – if at all.

In March 2020, a month before Virgin Australia entered voluntary administration, the airline suspended all regular international flights. Since then, all long-haul aircraft have exited the airline’s fleet and Virgin Australia does not plan to resume long-haul flights to Los Angeles or Tokyo for at least several years (if ever). By the time this happens, all existing Virgin travel credits will probably have expired.

So, what options do Virgin Australia’s overseas customers have? Unfortunately, not many…

Refunds from Virgin Australia are not an option

Because Virgin Australia has been in voluntary administration, there is unfortunately no possibility for tickets purchased before then to be refunded. Virgin’s new owner Bain Capital has agreed to honour travel credits issued to customers affected by cancelled flights (in the form of “Future Flight” credits), but is under no legal obligation to refund money.

“Any entitlement to a refund or other monetary compensation you may otherwise have had in relation to your booking has been impacted by our insolvency process,” a Virgin Australia spokesperson said.

“If your original booking was on or before 20 April 2020, we are unable to provide a refund. Virgin Australia is now subject to a statutory arrangement with our creditors under Australian law called a “deed of company arrangement”. The impact of that deed of company arrangement, when it is completed, will be to extinguish any entitlement to a refund that you may otherwise have had in relation to your booking, in exchange for a Future Flight credit.”

Virgin Australia’s administrators are also expecting to soon obtain an “order from the Bankruptcy Court for the Southern District of New York that will confirm the effect of the deed of company arrangement” in the United States.

Rather than accepting a travel credit, Virgin customers could have registered as unsecured creditors during the administration process. But in this case, customers would likely only receive around 9-13% of the value of their booking back – the same as Virgin’s bondholders and other unsecured creditors. This is now a moot point anyway as the sale process is almost completed.

So, how can non-Australian residents use their Virgin Australia travel credits?

Virgin Australia Future Flight credits can be used to book any eligible Virgin Australia flight, provided there is availability in the fare class reserved for travel credit bookings. But flights operated by partner airlines – including codeshare flights with a “VA” flight number – are not eligible. So, you cannot use your Virgin Australia travel credit to fly with Delta or Singapore Airlines.

The Virgin Australia website has more information about the use of Future Flight credits.

As Virgin Australia is currently only operating limited domestic flights within Australia, that does limit the usefulness of the travel credits.

Approached by Australian Frequent Flyer, a Virgin Australia spokesperson said the airline is planning to resume international short-haul flying when border restrictions are eased. Although Virgin will not resume flights to Tonga, other destinations including New Zealand will eventually return.

“New Zealand remains an important part of our plans and we recently welcomed the Trans-Tasman Travel Zone announcement by the Federal Government,” the Virgin spokesperson said.

“We are however reliant on two-way passenger traffic, therefore our approach to reintroducing services between Australia and New Zealand will ultimately be driven by demand. We are continuing to review our network and short-haul international services to New Zealand where demand and travel restrictions allow us to.”

Virgin’s Future Flight credits expire on 31 July 2022, and can be used to book travel until 30 June 2023. That should give many New Zealanders enough opportunity to redeem their credits for flights to Australia before they expire.

But Americans, who aren’t even allowed to travel to Australia at the moment, may have more difficulty using their vouchers.

If you can’t use your credit, keep in mind that Future Flight credits can be used to make bookings for other people. You can’t transfer the value of your credits to another person, but you could book a flight for a friend or relative in Australia.

You can join the discussion on the Australian Frequent Flyer forum: Future Flight Credits

Matt Graham

The editor of Australian Frequent Flyer, Matt's passion for travel has taken him to over 70 countries… with the help of frequent flyer points, of course!
Matt's favourite destinations (so far) are Germany, Brazil & Kazakhstan. His interests include economics, aviation & foreign languages, and he has a soft spot for good food and red wine.

You can connect with Matt by posting on the Australian Frequent Flyer community forum and tagging @AFF Editor.