Virgin Australia freezes Velocity frequent flyer points
Velocity Frequent Flyer members can continue to earn points, but won't be able to spend them for at least the next four weeks.
By Chris C., April 21 2020
Virgin Australia’s Velocity Frequent Flyer program has gone into a month-long freeze, following a run on points which threatened to weaken the airline's already-precarious cash balance.
While Velocity members will be able to continue earning points via credit card spend, Flybuys, Ola ridesharing and more, they'll be unable to spend those points until at least late May, when the temporary suspension will be reviewed.
Virgin Australia CEO Paul Scurrah said the rush to redeem points was sparked by a "reduction in confidence" once the airline's request for a $1.4bn government bailout was made public.
"When our original request to the government made its way into the newspaper there was a run on Velocity points that we weren't able to slow down," he told media during a briefing on the airline's decision to go into voluntary administration. "We need to make sure that we preserve as much value as we can as we get through this process."
It's estimated that some $2bn worth of Velocity points is in circulation, with Velocity counting 10 million members 90 corporate partners, along with airlines such as Singapore Airlines and Etihad.
The suspension covers everything from flight bookings with Virgin Australia and its partner airlines through to buying products and gift cards at the Velocity online store.
Early warning signs for Velocity members saw transfers to Singapore Airlines' KrisFlyer rewards program blocked and the purchase of gift cards limited to one card every 24 hours.
Velocity points that have already been earned will remain in members’ Velocity accounts, and the expiration of those points – which happens only if a member has not earned or spent any Velocity points for 24 consecutive months – will be extended by the duration of the suspension.
Virgin administrator Vaughan Strawbridge said on Tuesday that Velocity members and their points were "well protected", with the business itself being "a separate legal entity" from the embattled airline.
Strawbridge also ruled out selling the program of "as an individual asset", saying that Velocity would be offered to Virgin's new owner as part of the overall airline deal.
"Velocity is an important part of the group and it's intended that as we go through the restructuring process that we offer that up as part of the package... there is no intent to run a separate process to look at selling that."
Lauding Velocity as "an incredibly good asset", Vaughan added that the scheme was "a key part of how this business is restructured and comes out of administration."
Also read: Virgin Australia in administration – what happens to travel bank credit?
Additional material by David Flynn
Chris is a a former contributor to Executive Traveller.
16 Feb 2020
Total posts 3
Does anyone know whether existing confirmed and ticketed bookings with partner airlines have been paid for by Velocity or will partners cancel the bookings as they will not be paid by Virgin for the ticketed flights?
Velocity
23 Feb 2016
Total posts 21
Hey Chris - thanks so much for this - not much media around to explain whats happening here.
Should we expect the value of these points to plummet as creditors line up for their share of Virgin's $5 billion in debt?
Tried to purchase goods last night (with everyone else - site crashed constantly) and eventually worked out the two attempts to order an Apple watch were cancelled but the points were removed from my account.
Assume I just wait and the points will eventually return to the account once things settle down?
24 Apr 2012
Total posts 2424
Hi Valerio, regarding your question on the value of points, that's not something for us to speculate on.
Concerning your order from the Velocity Reward Store, that's a question best posed to Velocity Frequent Flyer directly, as it's a matter for them to resolve.
Velocity
23 Feb 2016
Total posts 21
Appreciate that - wouldn't expect anything but speculation but I understand why you can't give advice.
As for asking Velocity - well it's pretty pointless given how overwhelmed they are!
Velocity
23 Feb 2016
Total posts 21
UPDATE: Seems my order somehow got through at 6:38pm on Monday night.
Due to some points still not credited back for a cancelled redemption flight I had to top up my points spend with $58. That money and the points have been debited from my account/credit card.
Now the million dollar question ... will the goods turn up!
06 Jun 2017
Total posts 55
I ordered 400,000 points worth of alcohol on April 4 which still haven't been sent. Hoping it all gets sent though not liking my chances.
Velocity
23 Feb 2016
Total posts 21
I have to ask - what does 400,000 points worth of alcohol look like?! Is it a large amount or a small amount of really good alcohol??
06 Jun 2017
Total posts 55
I ordered 10+ bottles of Hennessy VSOP, 2 or 3 bottles of Hennessy XO, a few bottles of nice champagne, and some assorted nice Whiskeys/Gins/Rums.
08 Dec 2019
Total posts 4
As I'm sure with everyone that has already ordered things, I am wondering if we will actually receive them or how we will see the status of these orders. I am now unable to see as the store to track is not currently active, any other way can you let me know?
I ordered something 2 weeks ago which Harvey Normal has confirmed they had received the order but nothing further. I put another order through yesterday which I have been debited the points but like Valerio I don't know if the order has been canceled.
Interested in anyone else's experience with orders placed still being fulfilled.
Virgin Australia - Velocity Rewards
21 Sep 2018
Total posts 1
I ordered an iPhone on the 9th April and received a conformation email, however no tracking number.
Delivery was made to my office yesterday.
17 Sep 2019
Total posts 7
Velocity is not in administration. It's a separate company. No need to offload points as they will be usable, and there will be seats galore available in the future due to what will be long term subdued demand. Hold on to them as they will be great value.
25 Sep 2013
Total posts 1242
Seats galore... on what airline?
Singapore Airlines - KrisFlyer
08 Jun 2018
Total posts 91
Without being flippant, do you think the new owners will want seats occupied by people who paid for it, or by people who aren't paying, but have legacy privileges from the previous owners? Bearing in mind it's likely to be a completely new company that emerges from the rubble here? I know what my money is on. I'm sure the new owners (in an environment when every cent will count) can't wait to be flying planes just so velocity point holders can redeem them.
Singapore Airlines - KrisFlyer
20 Jan 2016
Total posts 3
Actually there's fortunately no issue there. The way the spin-of loyalty program business model works is that the airline pays the loyalty program to issue the points to the member. The loyalty program then in return pays the airline for redemption seat when redeemed. As far as Virgin is concerned, every seat redemption is actually a paid seat by Velocity, albeit likely at a preferential price.
Singapore Airlines - KrisFlyer
20 Jan 2016
Total posts 3
I should add . . . . this is the number one reason why theyve understandably suspended redemptions. Points accrued represent stored value that is mostly paid back to Virgin for seat redemptions and again will be in the future. The last thing a prospective new owner wants to see is those points heading out the door to other product suppliers before they buy
Virgin Australia - Velocity Rewards
13 Nov 2015
Total posts 10
Separate business, not separate company. Or at least that's my understanding.
24 Apr 2012
Total posts 2424
"Separate company" is correct, per the VAH announcement to the ASX today.
Jetstar Airways - Qantas Frequent Flyer
14 Jan 2017
Total posts 68
Then how come the administrators are calling the shots saying things like they wont sell velocity. Sounds like velocity is under the control of the administrators.
25 Sep 2013
Total posts 1242
It's really not.
Etihad
07 Jan 2016
Total posts 17
I was wondering, if things go wrong, if the portion (excluding bonuses) of point transferred from Amex can be re-converted in Ascent points? I have recently transferred 400k
Singapore Airlines - KrisFlyer
08 Jun 2018
Total posts 91
If things go wrong? I'm pretty sure we've passed that point. Not sure you mean by ‘recently' but even without the obligatory PhD in Hindsight, surely anyone who transferred points into the scheme in the last 4-6 weeks must have been aware of the potential risks? When will people learn, these aren't a currency and are afforded no form of regulatory protection.
Singapore Airlines - KrisFlyer
08 Jun 2018
Total posts 91
The problem for this scheme going forward is that this is going to kill public confidence in it. Why would anyone voluntarily put points into the scheme at this time when they have no idea at all what the outcome will be?
Jetstar Airways - Qantas Frequent Flyer
14 Jan 2017
Total posts 68
If it survives and can find another airline partner Velocity will have to devalue the existing points. Its quite likely the re-emergent virgin will be no thrills and that usually means no frequent flyer program in a traditional sense. Velocity could get around this by selling vouchers for flights on the new airline or maybe even for Qantas but this would most likely be related to money value of the ticket you are trying to buy and be extremely poor value. In addition status which is not really part of the Velocity program really will be wiped out. I really can't see anyone buying Virgin and continuing as is.
Velocity
19 Jun 2013
Total posts 66
Thankfully at this time anyway, it doesn't look like history repeating itself - as in my kissing some 200K-odd Ansett Golden Wing points, plus 2 biz Syd/Per return tix goodbye when Ansett was... umm...let go. At that time, all us Golden Whingers we're praying for SQ to ride in on their white horse and rescue us. Didn't happen. But. This isn't 2001-3, and times are (kinda) different, especially as regards the strength, sophistication, scope & $$ value of the FF programs.
My understanding is that exactly like QFF, Velocity is a gold mine, and quite likely a more attractive proposition than the airline itself. I'd be betting more on Velocity's long-term survival, than VA's. I'm not ready to convert my points into (sofar undelivered??) booze just yet. That's a classic!
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