Velocity Points: What to do if you’re worried Virgin Australia will fail
Redeeming for airline seats, or upgrading flights is recognised as the best use of your hard-earned miles and points. But how useful is this if Virgin Australia fails as a result of the COVID-19 crisis? Then your options depend on the level of risk you are comfortable with, and the options that Virgin Australia hasn’t already suspended.
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A lot of Velocity members don’t seem to be confident about the long term survival of Virgin Australia. It looks like a lot of members have been trying to extract the value of their Velocity points in the form of Store Gift cards (not great value) or transferring their points from Velocity to the Singapore Airlines Krisflyer program.
Well that is my interpretation since Velocity has now limited Gift Card purchase with Velocity points to one gift card per person per day, and has suspended the transfer of Velocity points to the Singapore Airlines Krysflyer program.
So what can you do, now that one of the best uses of Velocity points has been removed (Transfer to Krysflyer) and there are limits on the closest thing to cash redemptions – gift cards.
If Virgin Fails
So what to do with that huge Velocity points balance if you think Virgin Australia might fail in the next months due to the COVID-19 crisis? Well you have options, and the option you choose will be up to your individual situation, and what you think might happen to the airline industry in Australia, and more particularly the fate of Virgin Australia.
Your options as I see it are:
- Stay the COVID-19 crisis
This is the do-nothing option. With Virgin Australia already extending status for a year, then when the crisis is over, you will still have your status, and the ability to ‘spend’ you points, so why do anything?
- Hedge your bets
If you have a hefty balance, which you can’t really spend at the moment, because who knows when Virgin Australia will be back flying its full domestic schedule, let alone international routes, and you are reasonably confident Virgin Australia will survive, then you may want to hedge your bets by ‘cashing’ in some of your points, but holding on to a fair stash, to use with Virgin later
- Get out now before things get tough
Who knows what will happen? Best plan for the worst, and make use of those points as soon as possible. Maybe even not use them for the most valuable redemption, because who is flying at the moment anyway? Maybe getting just some value by buying via the Velocity Rewards Store is the best thing, whether it be product, service or gift cards.
1. Stay the Crisis
This is the least taxing option. If you have a low balance, it might be the only options, as you may not have enough to redeem your points for anything useful.
It’s also probably the laziest option. It involves doing precisely nothing.
2. Hedge your bets
This option is best if you actually have something you want either through the Velocity Rewards Store, or through Virgin Australia travel partners.
Look at your balance, and decide how much you wish to preserve with Virgin Australia, and how much you might want to redeem now. It helps to have something to redeem in your sights. Have a good look through the Rewards website, and decide what you might like.
Then, do your conversion. Work out how many points you will need, and what is the dollar value of the goods or service you are looking at redeeming. Don’t just take the dollar value on the rewards site as gospel. Surf around the internet to see what is the generally agreed AU$ price for the goods or service you are seeking.
Once you have done that, then divide the best price by the number of points the Rewards site charges, and you can work out your cost per point, or the value you are getting for each point you are spending. Let me put that more simply:
Agreed $ price ÷ cost in points = points value in $ and ¢
I would be aiming for a value between AU$0.01 and AU$0.02. Anything below 0.5¢ is on the face of it, not good value. There can always be external reasons – like you don’t have any more points, and it’s better to get something rather than nothing – which may make that low value worth it. But as a general rule, aim for that AU$0.01 and AU$0.02 range. If you get over AU$0.02 then you are definitely winning.
One option is gift cards. so, I can get a JB Hi-fi $100 gift card for 19,499 Velocity points. So if we do the sum – what is the value?
AU$100 ÷ 19,499 Velocity Points = $0.005
So that’s half of 1¢ = shit value
And, if you are going for gift cards, which apparently many Velocity members are, then remember that they have imposed a limitation of one Gift Card redemption per day for each member.
This has its own risks, since none of us know when flying is going to return to normal.
My best advice was going to be – convert your Velocity points to KrysFlyer points – but that option has now been suspended until ‘flight schedules return to normal’. I think your second best option is to book a points flight with one of Virgin Australia’s partner airlines. I’d pick the larges you can find, or a government-backed airline, as they are probably the least likely to fail.
Now, my advice here is a little subjective. I would stick with the big airlines, or the ones that have, or are likely to get governement support. So that would be, in approximate preferential order:
- Singapore Airlines (they have just got about US$13 billion backing from the investment arm of the Singapore Government, Temasek Holdings
- Silk Air – because they are a subsidiary of Singapore Airlines
- Delta – because they are huge and the USA cannot afford to see them fail
- Etihad – because they’re a middle easter airline, and government-backed
What to book? Well, that’s a good question. Again, you need to take a risk here. I suggest booking something at least 6 months out, as that seems to be the earliest anyone is betting that you might be able to travel again. On the other hand, Airlines will probably continue to offer no penalty changes if they have to cancel your flight, so hopefully, it won’t be that much of a risk. The more important question will be where is it safe to go?
If you don’t have enough points – then you’re f**ked. There is also a question that since these will be ticketed by Virgin Australia for a partner airline, will they be honoured if Virgin goes bust? Jury is out on that question.
3. Get out now before things get tough
This is the option for the pessimists. And you will naturally want to get the best value possible. Normally, I would say redeem for flight or upgrades, and this is possible, even though no one is sure when Virgin Australia will be back in the air with a full schedule. If they cancel your flight for any reason except bankruptcy, then you will odds on get your money and points back, although there is some risk. This will probably be the best value redemption, but again it has risk.
Move your points to another loyalty scheme
Now, up until last weekend, you could move your points to Singapore Airlines KrisFlyer program, but they have stopped this. There is some debate about them not adhering to their own guidelines on member notification, but good luck with winning that argument!
Your best bet is to go with a points redemption on a Travel Partner airline as outlined above, now that they have suspended transfers to KrisFlyer. This is not without risk. If Virgin Australia (God or other higher power forbid!) should go under, there is no guarantee that your points redemption flight on a partner airline will be honoured.
Take anything from the Velocity Store: schedule your gift card redemptions daily, get anything you can for your points, because something is better than nothing! Give to the Starlight Foundation. Buy an Alchemy Flask Candle! Buy anything!
Up until last weekend, the clear winning option for this will they/won’t they dilemma over the survival of Virgin Australia, was to transfer your points to Singapore Airlines KrisFlyer scheme, an option which only solidified once Temasek Holdings announced its US$13 billion bailout.
Now that Virgin Australia has suspended transfers of points to KrysFlier, the most lucrative option to use your points has evaporated.
Personally, I would go with redemption on a partner airline and take the risk.
Redemptions for gift cards are poor value, and some contributors on airline forums are even questioning whether they will be delivered once redeemed.
However, I should ‘fess up to having transferred my meagre five-figure Velocity point balance to Krisflyer a few weeks ago, when this all started to look like going pear-shaped. Thanks for the prompting Seat 2B.