What Virgin Australia’s collapse means for customers

What does Virgin Australia going into voluntary administration mean for customers with booked flights, travel credits and Velocity frequent flyer points?

Virgin Australia customers could be left stranded as the company goes into voluntary administration.

Virgin Australia customers could be left stranded as the company goes into voluntary administration. Source: AAP

With Virgin Australia formally going into questions have been raised about what this will mean for customers of the troubled airline.

Monash University aviation expert Professor Greg Bamber told SBS News many of the details of how the collapse could affect customers will need to be worked out by the new administrators.

“We don’t know a definitive answer yet, because it depends on the administrators from Deloitte who are making those decisions,” he said.

Advertisement


“The administrators would only now be picking up their laptops and working out what the restructuring is going to mean.”

He said Deloitte have signalled that they want to bring a “slimmed down” version of Virgin Australia back onto the market, potentially with new owners or shareholders, meaning Virgin in some form will still likely continue.

But that doesn’t necessarily mean that customers with travel vouchers or money in their “flight banks” will have those commitments honoured.

“I would hope they would honour the travel credit that customers have in what Virgin calls a ‘travel bank’. It appears there are more than a billion dollars of people like me who have bought tickets in advance on Virgin Australia,” Professor Bamber said.

A grounded Virgin Australia aircraft.
Virgin Australia has confirmed it has entered voluntary administration. (AAP)


He said the reason there were so many flight vouchers around at the moment was due to coronavirus cancelling many flights and the airline choosing to only give out travel vouchers instead of full refunds.

Professor Bamber added that if people were to have trust in the new Virgin, post-restructure travel credits would need to be honoured.

“If the administrators cancel those or annul them, it’s going to discourage people from booking with Virgin in the future, and people will have less trust in booking with Virgin in the future,” he said.



Frequent flyer points

He added that the situation was more complicated with Velocity points, as Velocity was a separate company from Virgin that hadn’t been placed in administration.

But with Virgin going under there was now no way for customers with Velocity points to redeem those points until a new agreement was potentially worked out with Virgin post-restructure.



Virgin Australia CEO Paul Scurrah told reporters on Tuesday that Velocity points would remain valuable, though there would be "pause" in being able to use those points on Virgin flights. 

"That business is well structured, it has a trustee, a separate CEO and we'll be working with them as we go through this process. I think it's also important to say on Velocity that there is a trust in place that has cash backing for the points," he said. 

He also said that those with credited flights could use them on any Virgin domestic flights for the time being. 


Share
3 min read
Published 21 April 2020 at 12:38pm
By Jarni Blakkarly