Virgin Australia’s creditors approved the airline’s purchase by US investment giant Bain Capital today – the final major hurdle in the takeover process that began shortly after Virgin entered voluntary administration in April this year.

Bain will formally take over the airline in the next few weeks, and it’s future is secure for now – though the same can’t be said for thousands of staff who have lost their jobs.

Bain has deep pockets to weather the ongoing downturn in travel and tourism, though it no doubt wants to see Australians return to the skies sooner rather than later.

Bain’s plan is to retain the existing management team but transform Virgin into a mid-tier airline, sitting somewhere between the low-cost Jetstar and full-service Qantas.

A lot of the details remain unclear, but we do know that Virgin will operate an all-737 fleet on domestic and short-haul international routes until long-haul travel is viable again.

At that time, Virgin will likely buy new widebody aircraft.

Virgin has said it will focus on operating a smaller domestic and short-haul international network, jettisoning unprofitable routes.

In terms of the travel experience, Virgin will likely retain many of its lounges, though we don’t know which ones yet.

Onboard, customers can also expect some changes (eg. paying for food, entertainment and seat selection), though again, we are waiting to see the details.

Customers’ existing Velocity Points and travel credits are safe.

Today is good news for loyal Virgin customers and the majority of staff who will remain employed. Our fingers are crossed for a brighter future for the airline.

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Virgin Australia has unveiled its plan to become a stronger, more profitable and competitive airline as it comes out of voluntary administration under the ownership of Bain Capital.

Under the reboot released today, Virgin 2.0 will:

• move to an all-Boeing 737 mainline fleet for domestic and short haul international operations, which will see the removal of ATR, Boeing 777, Airbus A330 and Tigerair Airbus A320 aircraft
• retain its regional and charter fleet while it reviews different operating models to support continued regional and charter flying
• continue to suspend flights to Los Angeles and Tokyo with the intention to recommence and grow long-haul flights when sufficient demand returns
• discontinue the Tigerair Australia brand but retain its Air Operator Certificate (AOC) to provide the option for ultra-low-cost operations in the future
• aim to be the “best value” carrier in the market, not a “low cost” carrier
• continue to serve both business and leisure travellers with a two-class cabin offering (economy and business class)
• maintain a network of lounges in key domestic locations with a plan to re-open them when demand returns
• expand its current flight network as demand returns
• invest significantly in the “comprehensive digital re-platforming of both the airline and Velocity Frequent Flyer program”
• carry forward all travel credits and Velocity Frequent Flyer points. Credits for bookings made prior to administration will be extended to 31 July 2022 for travel until 30 June 2023 (further info will be provided to customers in due course).

While it’s encouraging to see the airline provide more information about its future plans, many of the key details customers want to know are missing.

What exactly will the travel experience look like, both on the ground and in the air, post-Covid?

Which domestic and international routes does it see as being viable over the longer term?

We’ll just have to wait and see.

After so many years of financial mismanagement and poor strategic decisions, at least there’s some light at the end of the tunnel for both the airline and its loyal customers.

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Virgin Australia’s Velocity Frequent Flyer program is expanding opportunities for members to use their hard earned points.

Points redemptions were paused when the airline entered voluntary administration, but with the new owners now in control they are progressively being relaunched.

Until today, points could only be redeemed on a limited number of domestic routes for flights from 1 September. Now, flight redemptions are available on almost the entire (albeit still diminished) Virgin domestic network for travel as of today. The full list of eligible routes can be viewed on Velocity’s website and includes popular holiday destinations around the country.

Upgrades from economy to business class are also available.

To give customers flexibility and peace of mind in the face of uncertainty about future travel restrictions, Velocity is waiving fees for any changes or cancellations you make before 1 September. In addition, if your flight is cancelled before 1 September 2020 you’ll get a full refund of your points/cash in full to the original form of payment (except for any booking or credit card fees).

You can also now redeem your Velocity Points to book a hotel, with more than 800,000 hotel rooms at over 15,000 hotels available throughout Australia. It looks like some good deals are also on offer.

Velocity promises that by the end of July, car hire with Europcar using points will also be available. Other redemptions like purchases of gift cards and wine remain offline, but hopefully it won’t be long before these are reinstated as well.

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The big American investment firm Bain Capital has won the process to take over Virgin Australia after its main competitor for the airline, Cyrus Capital Partners, surprisingly withdrew its bid this morning.

In a statement issued to the Australian Stock Exchange, the airline’s administrator Deloitte confirmed that it has “now entered into a Sale and Implementation Deed with Bain Capital which will result in the sale and recapitalisation of the businesses” of the Virgin Australia Group.

The Sale and Implementation Deed is subject to minimal conditions such as regulatory approvals. Approval by the Australian Treasurer pursuant to Australian Foreign Investment Review laws has already been received by Bain Capital.

Deloitte states that “no return to shareholders is anticipated. At this stage, it is not possible to determine the estimated return to creditors however an update will be provided ahead of the second meeting of creditors.”

Bain’s plan is to transform Virgin into a mid-tier airline, sitting somewhere between the low-cost Jetstar and full-service Qantas. It remains to be seen what this will mean for customers. I’d expect that there will be a lot more paid add-ons for such things as food, entertainment and seat selection. The lounge network may not survive in its current form. But fares should be well-priced.

The Velocity Frequent Flyer program, being very valuable, will be retained, but it may be rebranded to align with the Virgin 2.0 brand. Existing points balances and reward bookings will be honoured, as will travel credits.

It appears certain that Virgin will focus on fewer profitable domestic routes, and perhaps some short-haul international routes once border restrictions are lifted.

These will be operated almost exclusively by Boeing 737 narrowbody aircraft.

That means we’ll most likely say goodbye to Virgin’s A330 and Boeing 777 fleets and their fantastic business class products.

Tiger Airways (owned by Virgin) will be wound down.

Bain’s takeover bid is still subject to approval by creditors, which should occur in the next couple of months.

Bain has promised to fund the airline’s operations in the meantime.

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Bad news for Qantas Points holders who like to fly with Emirates: from 1 September 2020, the number of Qantas Points required to book award seats with the Dubai-based airline will rise significantly.

Right now, Emirates is included in the Qantas Classic Flight Reward price table, which also applies to award seats with Qantas, Jetstar, Airnorth, Fiji Airways, Air Vanuatu and American Airlines.

According to a notice on Qantas’ website, Emirates will only be included in this price table until 31 August 2020.

From 1 September 2020, Emirates moves into the Partner Classic Flight Reward table, in which award seats are more expensive.

This table applies to seats with Air France, Air Niugini, Alaska Airlines, British Airways, Cathay Pacific Airways, China Airlines, China Eastern, Cathay Dragon, EL AL, Emirates (for Emirates bookings from 1 September 2020), Finnair, Iberia, Japan Airlines, KLM, LATAM Airlines, Malaysia Airlines, Qatar Airways, Royal Air Maroc, Royal Jordanian, S7 Airlines and SriLankan Airlines.

Once the new pricing takes effect, a round-trip from Australia to Western Europe with Emirates will cost 132,400 Qantas Points in economy (up from 110,400), 318,000 points in business class (up from 289,200) or 455,000 points in first class (up from 433,800).

More annoyingly, you’ll no longer be able to combine Qantas and Emirates flights in one itinerary and pay the current, distanced-based price.

That’s because any airline in the ‘Partner table’ has its flights priced separately to other airlines in the same itinerary, which increases the total points cost.

To illustrate: if you fly from Sydney to Singapore with Qantas and then connect to an Emirates flight from Singapore to London (via Dubai), you currently pay 144,600 points. From 1 September, this will cost 68,400 points for Qantas’ Sydney-Singapore leg, and 119,200 points for Emirates’ Singapore-Dubai-London leg, totalling 187,600 points – a difference of 43,000 points.

Qantas Frequent Flyer members have until 31 August to lock in the current pricing. If you’re thinking about international travel once border restrictions ease, it may be a good idea to speculatively book some seats before 31 August. The fee will be just 6,000 points per person if you end up cancelling.

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Virgin Australia is once again allowing Velocity Points holders to use their points for domestic flights. As of today, travellers can book seats from 1 September 2020 on some of the carrier’s “most popular” routes (see below).

Since there is still a lot of uncertainty about travel restrictions, Virgin is providing extra flexibility by waiving cancellation and change fees for reward bookings until 1 September. That means you can get a full refund of points and money paid if you (or Virgin Australia) cancel the booking for any reason before 1 September.

By then, Virgin should have new owners and its future will be clearer. Nevertheless, any bookings made right now should be viewed as purely speculative.

Other Velocity Points uses, like transfers to KrisFlyer and online store redemptions, remain frozen.

Virgin Australia also says it has implemented additional cleaning and hygiene measures including social seat distancing onboard.

Initial list of routes as at 15 May 2020 – subject to change

*Travel to this destination may require a transfer through a connecting airport. Minimum and maximum connection times apply. The connection time will be displayed during the booking process.

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