Virgin Australia has entered voluntary administration and frozen its Velocity rewards program but customers have been assured frequent flyer points and customer credit for cancelled flights will be protected during the airline’s sale process.
Virgin’s Velocity Frequent Flyer arm, while owned by the group, is a separate company managed by a trust and is not in administration.
Velocity in a statement on its website told members their points “aren’t going anywhere” despite freezing redemptions for four weeks.
Members reportedly crashed the Velocity website on Monday night.
They will no doubt be hoping to avoid a repeat of 2001, when an estimated $700 million worth of Ansett Australia global rewards points were rendered worthless when the airline collapsed.
Virgin Australia is 90 per cent foreign-owned, with Singapore Airlines, Etihad Airways and Chinese conglomerates HNA Group and Hanshan owning 80 per cent between them, while Richard Branson’s Virgin Group still owns 10 per cent.
The company – which is carrying about $5 billion in debt after several years of financial losses – has been decimated by the coronavirus pandemic as demand for travel evaporated during increasingly severe quarantine measures.
Last month Virgin stood down about 8,000 of its 10,000 workers until at least the end of May, shut down budget subsidiary Tigerair indefinitely, and further slashed domestic flight capacity in the wake of the coronavirus border restrictions.