It’s no secret that Virgin Australia is struggling right now, with lots of stories in the media questioning its viability. The airline couldn’t turn a profit when times were good, so now that the coronavirus has decimated the travel industry its prospects look even gloomier.
I don’t think Virgin is going under immediately, but it’s certainly possible if this crisis drags on. It has billions of dollars in debt and a limited amount of cash on hand. The airline has asked the federal government for a $1.4 billion loan to see it through, but the federal cabinet is reportedly split on the issue.
Over the past couple of weeks there’s been a ‘run on the bank’ of sorts, with lots of Velocity Frequent Flyer members rushing to redeem their points in case the airline went belly-up. Many of these people probably have Ansett-tinged nightmares in mind.
Velocity has now restricted two of the most popular ways members have been spending their points. Transfers to Singapore Airlines’ KrisFlyer program were suspended tonight. Velocity’s website now displays the following message: “Velocity Frequent Flyer and Singapore KrisFlyer are temporarily suspending conversion of Points and Miles between the two programs. We’re looking forward to providing you with this program feature once flight schedules return to normal.”
Earlier this week, Velocity also imposed a limit of one gift voucher redemption per day “due to high demand”.
I’m really not sure what advice to give to Velocity members. Your two options are to ride the crisis out with the risk of losing your points if the airline fails, or spend your points now on items at the Velocity store. You won’t get as much value as using points on flights (you’ll get around 0.5 cents per point at the Velocity store), but at least you’ll get something.
If you’re wondering what other people are thinking and doing, join the discussion over at the Australian Frequent Flyer forum.
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