Are my Virgin Australia Velocity frequent flyer points safe?

Sitting on a sizeable bounty of Virgin Australia Velocity Frequent Flyer points, and concerned about what’s going to happen to those points in the current climate?

You’re not alone. With over 10 million members, Velocity is one of Australia’s largest loyalty programs – and with all Velocity Points currently ‘frozen’ in members’ accounts, it remains to be seen when people will be able to spend their points once again.

Here’s what you need to know about the current state of play.

Are my Velocity frequent flyer points safe?

The short answer is that nobody knows how safe your Velocity Points are – not even the administrators at Deloitte who've been appointed to find a new owner for Virgin Australia and the Velocity scheme, following Virgin's collapse on April 21, 2020.

Your Velocity Points are certainly not as safe as they were a few short months ago, because there's no guarantee of what the future will hold.

Virgin Australia’s administrators have said their preference is to see Virgin Australia sold as a package deal which includes Velocity, so that Virgin's buyer can quickly relaunch the airline with a loyalty program intact.

Even so, it would be up to the owners of 'Virgin 2.0' to determine how much value your Velocity Points hold. For example, will the number of points needed for an upgrade or a 'free' flight be the same as before, or will you need more points?

An alternative scenario could see Velocity handed off to a seperate entity such as the retail-based Flybuys loyalty program.

Read more: 20 cashed-up buyers are now circling Virgin Australia

What’s happening to Velocity Frequent Flyer?

Although Velocity Frequent Flyer itself is not in administration, it definitely hasn't been smooth sailing.

The weeks leading up to Virgin entering administration saw Velocity pause points transfers to the KrisFlyer scheme of partner Singapore Airlines, and then impose strict limits on using points to purchase gift cards.

On April 21, Virgin temporarily paused the redemption of Velocity Points for an initial period of four weeks, following what Virgin Australia CEO Paul Scurrah described as "a run on points" which threatened to weaken the airline's already-precarious cash balance.

It was subsequently revealed that Velocity Rewards gave Virgin Australia a $150 million loan in 2014 – a loan that's has never been repaid, and which now sees Velocity joining a queue of some 10,200 creditors – including financiers, aircraft leasing firms, airports, suppliers and staff – owed an estimated $6.8 billion by the failed airline.

If those creditors receive cents in the dollar against Virgin's debt, this would likely have a flow-on impact to how much money Velocity holds against its outstanding points.

Can I still earn Velocity Points?

Velocity Frequent Flyer members can continue to earn Velocity Points in many of the usual ways, although some of those opportunities are currently limited.

For example, with Virgin Australia operating only a limited set of domestic flights – and many of Virgin Australia’s international partner airlines pausing flights Down Under with various travel bans in effect – members are more likely to be earning points on the ground than in the air.

This remains possible with many of Velocity’s partners, such as through the Ola ridesharing app, various online retailers which are linked to the Velocity eStore, and by converting Flybuys points into Velocity Points.

Being the loyalty program of Coles supermarkets, Coles Express petrol stations, and related brands such as First Choice Liquor, Liquorland, Kmart and Target, Flybuys members first earn Flybuys points on these spends, which can still be converted into Velocity Points.

However, some of Velocity’s usual partners – including major Australian banks and credit card issuers – have currently paused the ability to convert credit card points over to Velocity.

Read: Banks pull down the shutters on Virgin Australia Velocity

These pauses will remain in place until the Velocity Frequent Flyer program once again allows its members to spend their points.

This doesn’t mean you’re necessarily ‘missing out’ on points by not being able to convert them from your bank over the Velocity program – it just means you’ll need to keep them in your bank’s own loyalty program for a little longer, and transfer them all across when the option returns.

Can I still use my Velocity Points?

For the time being, Velocity Frequent Flyer members cannot spend their Velocity Points in any way.

This applies both to the Velocity Points that were already in your account on April 21 – the date the freeze was imposed – as well as any new points that you earn while the freeze is in place.

When will my Velocity Points be ‘unfrozen’?

Velocity Frequent Flyer says the pause on spending points will be in place until at least May 19 2020, and this date could be pushed back further until there's more clarity around the immediate future of the rewards program and Virgin Australia itself.

However, Velocity has repeatedly assured that its members’ points are safe and will remain in their account.

Can I convert my Velocity Points into KrisFlyer miles?

Not right now. Velocity Frequent Flyer suspended the ability to convert Velocity Points into Singapore Airlines KrisFlyer miles on April 4 2020.

At the time, Velocity advised that the ability to convert points into KrisFlyer miles would be halted until "flight schedules return to normal".

As such, even if the Velocity program reinstates the ability to use points on or around May 19, conversions to the KrisFlyer program may remain blocked until a later date.

Can I buy gift cards with Velocity Points?

Not right now. In the same way that Velocity Points cannot currently be used to book flights, secure upgrades or be converted into KrisFlyer miles, turning those points into gift cards is also off the table until the ability to spend points is restored.

The same is true of using Velocity Points for other merchandise such as kitchen appliances, wine, sporting gear and electronics: all of which is unavailable until the program returns to normal.

Before the freeze, Velocity – as well as its rival Qantas Frequent Flyer – imposed limits on the number of gift cards that its members could redeem their points for, with Velocity capping this at one gift card per member per 24-hour period.

When the ability to cash out points for gift cards returns, it’s likely that a similar limit will apply while demand remains high.

Can I transfer Velocity Points to family members?

Yes, you can. Even though you can’t currently spend Velocity Points, those points can still be transferred between eligible family members.

Normal transfer limits apply, which means each Velocity member can make up to four family points transfers per year, each of between 5,000 and 125,000 Velocity Points.

There’s no limit on the number of points an individual member can receive into their account from other eligible family members: only on how many points can be transferred out of an account.

Of course, regardless of whose account any Velocity Points are residing in, they can’t be spent until the program returns to normal operation.

Read more: How to transfer Virgin Australia Velocity frequent flyer points

What happens to Velocity 'family pooling'?

There's no impact on family pooling in the Velocity Frequent Flyer program as a result of these updates: except, of course, that any pooled points cannot currently be spent.

Family pooling allows Velocity Frequent Flyer members living at the same address to direct either the Velocity Points they earn, or the Velocity Points and status credits they pile up, to a particular member's account.

Traditionally, this has helped to avoid the limitations of manual Velocity Points transfers for high-earning members, while also making it easier for some members to climb the status ladder, by having other people earn status credits on their behalf.

Read more: Velocity family pooling is your shortcut to Gold frequent flyer status

What’s next for Velocity Frequent Flyer?

The first step in getting Velocity Frequent Flyer back to ‘business as usual’ will be restoring the ability for its members to spend their points, even if in limited ways at first.

This could occur on May 19, being four weeks after the initial pause, or later, if the freeze is extended.

With 20 potential buyers currently circling Velocity’s parent company, Virgin Australia, bringing the airline out of administration would also help shore up the Velocity program, and pave the way for other uses of points, such as conversions to Singapore Airlines KrisFlyer, to return.

Also read: Virgin administrator says Velocity won't be stripped down, sold off

Chris C.

Chris is a a former contributor to Executive Traveller.