Virgin Australia’s frequent flyer program has frozen all points earned by members, as the airline’s administrators begin carving out its future.
Although Velocity is owned by the Virgin Australia Group, it is a separate company and is not in administration.
However, Velocity notified members via email yesterday that it had paused all point redemptions for an initial period of four weeks.
“We know how much you love to plan your travel and use your points to redeem flights. However, the ongoing travel restrictions and reduced flights have limited the options for you to use points for flights,” the email said.
“We’re seeing more members use points to shop online for items such as gift cards, electronic goods and wine. This unexpected demand has made it difficult for our suppliers to provide these offers and limits the availability for all members to redeem their points.”
Velocity said it has a trustee in place to look after the interests of members.
“We will continue to assess a range of options for the program and we want that to include a continuation of our longstanding partnership with Virgin Australia,” it said.
Suitors line up, including Branson
Virgin has appointed Deloitte to help restructure its $5 billion debt pile and recapitalise the business.
Deloitte’s Vaughan Strawbridge said on Tuesday the intention of the administrators is to bring the company out of administration as soon as possible.
“We are committed to working with Paul [Scurrah] and the Virgin Australia team, and are progressing well on some immediate steps,” he said.
“We have recommended a process of seeking interest from parties for participation in the recapitalisation of the business and its future, and there have been several expressions of interest so far.”
According to media reports, there are more than 10 interested parties in Virgin Australia, including BGH Capital, Indigo Partners, Oaktree Capital, and entrepreneur Richard Branson, who owns a 10 per cent stake in the company via Virgin Group.
Branson penned a letter to Virgin Australia staff yesterday saying its move into voluntary administration was not the end of the airline, “but I believe a new beginning”.
“I promise that we will work day and night to turn this into reality”, he said.
Dear @VirginAustralia team. I am so proud of you and everything we have achieved together. This is not the end of Virgin Australia, but I believe a new beginning. I promise that we will work day and night to turn this into reality https://t.co/GJH1zhEqEd pic.twitter.com/GelLiA6DKG
— Richard Branson (@richardbranson) April 20, 2020
Both the Queensland and NSW governments are also expected to have a say in the future of Virgin.
The Queensland government unsuccessfully attempted to bait the federal government into providing support for Virgin over the weekend with a conditional $200 million lifeline, and blasted the NSW government over news that it would provide financial assistance if the airline relocated its headquarters to Sydney.