Virgin Australia administrators: no refunds, just 'conditional' credit
Passengers with cancelled Virgin Australia flight bookings will now be offered a new type of restricted travel voucher.
By Chris C., May 12 2020
Virgin Australia’s administrators will issue ‘conditional credits’ to customers on cancelled flights in place of cash refunds or regular travel bank vouchers, but can't guarantee they would be honoured by the airline’s new owners.
The credits will also have a strict use-by date: they'd be valid only while Virgin Australia remains in administration.
It would be at the discretion of any new owner of Virgin Mk II as to whether any outstanding conditional credits would remain valid.
Lead administrator Vaughan Strawbridge of Deloitte says that these credits are all about preserving “as much goodwill associated with the Virgin brand and business as possible for a buyer.”
They may also help conserve the airline's all-important cash reserves, as Virgin is “experiencing an increasing number of (credit card) chargebacks” as would-be passengers on cancelled flights are now resorting to their credit card company's refund mechanism instead of relying on the airline.
Earlier this month, Virgin Australia temporarily paused the issuing of most new refunds and travel credits as part of the administration process, leaving chargebacks as a last-resort for frustrated customers.
Virgin has received about 340,000 requests for refunds after cancelling 65,000 flights between March 1 and April 30 due to the spreading coronavirus pandemic.
Deloitte's scheme, approved on May 13 by the Federal Court, will apply to customers who booked cancelled flights prior to Virgin Australia entering administration on April 21 2020.
Full refunds and conventional travel credits remain available to eligible passengers who made flight bookings since the administration period began.
Conditional credits are better than nothing, administrators say
Giving customers conditional credits in response to cancelled flights would give people a chance to get their money's worth of travel: for instance, using a $200 credit to make a new $200 flight booking.
The alternative – having customers register as ‘unsecured creditors’ of the company – wouldn’t be as rewarding, Strawbridge believes.
“In the event the Virgin Companies were to proceed into liquidation, based on the Administrators’ work undertaken to date and our understanding of the Virgin Companies’ financial position, such creditors are unlikely to be made whole,” he says.
“The Conditional Credit scheme offers those customers the possibility of realising 100% of the value of their refund by using the credit on a future flight,” Strawbridge adds.
If a conditional credit can't be used by the customer, it's believed they'd be no worse off than had a credit not been issued at all.
“The customer will remain an unsecured creditor in those circumstances and will retain whatever general law or statutory rights they currently hold,” said Strawbridge.
How conditional credits could be used
Passengers issued with conditional credits would be able to apply them towards an Australian domestic itinerary operated by Virgin Australia or Virgin Australia Regional Airlines.
International flights, and codeshare flights operated by other airlines, would not be eligible for redemption using conditional credits.
Those who originally booked via a travel agent would need to make their new booking via that same agent, but could only make one booking per credit.
On the other hand, passengers who booked their flights directly with Virgin Australia would instead be able to stretch one conditional credit across multiple bookings, if the full value of the credit isn't spent the first time around.
Deloitte prepares Virgin Australia for sale
Strawbridge reports that 19 prospective buyers of Virgin Australia have been granted unfettered access to the airline's books and are expected to lodge their first offers by this coming Friday, May 15.
A new name to enter the bidding is the parent company of Indian airline IndiGo, which if successful could take Virgin Australia back to its low-cost roots: charging a base price for the seat only and with everything else a paid add-on.
However, a plan by rival Regional Express to offer flights on key domestic routes may dampen offers for Virgin Australia as domestic competition increases, which will almost certainly put downward pressure on airfare prices and profits.
Regional Express, which was born out of the demise of Ansett nearly two decades ago, is proposing to lease a new fleet of aircraft and compete on major business routes such as between Sydney, Melbourne, Brisbane, Adelaide and Perth.
Read: Rex to challenge Qantas, Virgin Australia on capital city routes
Chris is a a former contributor to Executive Traveller.
QF
11 Jul 2014
Total posts 895
Looks like Chargeback for goods not received is going to come into play
Singapore Airlines - KrisFlyer
08 Jun 2018
Total posts 92
Sadly yet another potential nail in the coffin for the sale of the business as a going concern. Public confidence is being eviscerated in the brand. With each passing day it's hard to see how any value remains. It's at best a cash drain in an industry which will see its worst ever prolonged downturn and with brand value being eroded daily its not difficult to imagine that many will decide its too risky as is, or to just pick up some of the assets and start the thing again. But trying to restart the business as is looks an increasingly daunting (and expensive) challenge.
22 Jan 2020
Total posts 71
Never ever going to be resurrected in anything like the way it was when it collapsed into the arms of the administrator. It will end up as a low cost carrier as it will not have any capital or funds to invest in any type of premium service. Expect it to look more like Tiger than Virgin.
12 May 2020
Total posts 1
Commbank have refused to process a chargeback for me, they say govt regulations mean they can't dispute transactions that relate to COVID-19. Obviously they are fobbing me off. Does anyone know which banks are processing chargebacks?
04 Aug 2018
Total posts 6
I called CBA today and their rep told me that MasterCard has instructed them to not allow chargebacks for anything related to Covid. ANZ said the same thing to me about Visa not allowing chargebacks.
I called Amex about a different charge for a VA flight and they had no problem processing it.
I don't see why MC/Visa have to be any different to Amex
Qantas - Qantas Frequent Flyer
25 Sep 2013
Total posts 1252
Pays to be with Amex.
29 Mar 2017
Total posts 29
I didn't realise this was possible. I just disputed a bunch of flights online with AMEX and they pretty much refunded them straight away. After five disputes though, I have to ring them, must be some kind of auto-limit. Thanks for the tip!
Qantas - Qantas Frequent Flyer
30 May 2013
Total posts 354
Looks like these credits I'm still waiting on will never be able to be used.
Qantas - Qantas Frequent Flyer
26 May 2014
Total posts 465
If the administrators propose a scheme of arrangement that includes flight ticket holders as creditors, are they required to offer those creditors the opportunity to vote? For most it would seem beneficial to force VA into liquidation and obtain a chargeback from the credit card company. Any insolvency specialists reading that can clarify?
03 May 2013
Total posts 663
Surprise surprise.
06 Aug 2017
Total posts 5
Not sure how burning passengers could be preserving goodwill of the company? Even more amazing to think there are 20 mobs out there who think they can work miracles.
Singapore Airlines - KrisFlyer
08 Jun 2018
Total posts 92
Almost certainly none of them do think they can work miracles. There seems to be a misconception on this site that the role of the administrator is to preserve the interests of the passengers (and especially the members of the FF program) it absolutely isn't beyond the requirement to extract best value. At some stage they will release that if the thing can't be sold as a going concern, then it is essentially an asset realisation exercise, and at that point the cash the business is preserving is likely to be more valuable than goodwill. Goodwill only has a value in a going concern scenario. I am not trying to make a judgement here on the rights or wrongs of it, but in my view the likelihood of a going concern sale is retracting on an hourly basis. Maybe wait and see how many of the 20 make an indicative offer on the 15th and on what basis. And how many of those offers survive extended Due Diligence.
23 Aug 2016
Total posts 13
The language used has progressively degenerated. The initial 'bouquet' announcements of Scurrah have progressively slipped to the thorny offerings of the administrator.
At the end of the line, we will be coerced into feeling fantastic about resetting every travel bank and forward flight to the princely sum of zero. All wrapped up by the administrator describing how fortunate we should feel for not being hit by a closure fee.
But, they are at the absolute front of the queue. Do their forward facing ears actually hear the screams behind them?
Virgin Australia - Velocity Rewards
24 Jan 2018
Total posts 605
I fear you're correct, Revolio. I had high expectations of team Deloitte, but their additional demands of aspirant purchasers, made earlier this week with indicative bids due this Friday, ranks of 'amateur hour'.
Korda Mentha must be LTAO at Deloitte. I watched Strawbridge during the initial creditors meeting, he didn't seem very confident. Hope I'm wrong (but worried I'm not).
23 Aug 2016
Total posts 13
The debt was always too high D-T, live and learn. Will end up costing me $6.5k, I buy way in advance, had Platinum covered until May 2021, had it for 10 years - miss lounges and Row 3, but that's about it.
Next chapter, (and six and a half thousand over 10 years plus is easier to write-off) more terrestrial and reduced travel in the future.
Virgin Australia - Velocity Rewards
24 Jan 2018
Total posts 605
Easy to say that now R, but after your next flight in J-class, the pre-flight champaign in a glass, cutlery instead of plastic, personal service ..... just when you think you've weaned yourself away, they'll pull you (and me) back into the same old joys of Row 3. The only remaining question: Seat A or Seat F.
QF
11 Jul 2014
Total posts 895
Whether it's $10.00 or $10,000.00 how a company treats my cash during Covid 19 is how I will treat them after it's all over.
QF
11 Jul 2014
Total posts 895
I haven't seen to many people on here complaining about the Flight Centre antics on here, they owe me $7,500.00. No way are they getting away with that one.
24 Sep 2019
Total posts 13
Can anybody advise which airlines actually are offering cash right now? It wouldn't be a very long list.
Qantas - Qantas Frequent Flyer
15 Jan 2013
Total posts 48
Qatar, SIngapore Airlines & Emirates are some of the bigger ones that have pretty good refund options plus a lot more (although some of them have complex rules to qualify for a refund)
22 Jan 2020
Total posts 71
Qantas have processed 2 flights with cash back to card and 2 reward flights with points returned and taxes back in the bank
13 May 2020
Total posts 1
i received a full cash refund from japan airlines back in early April
13 May 2020
Total posts 1
Is anyone aware of the status of reward tickets issued on partner airlines? I have 2 x J award tickets to London on Singapore airlines departing July. I'd like to be able to use them at a later date. They have SQ flight numbers and a SQ PNR. Do you think I could deal with Singapore, to change or are they worthless?
13 May 2020
Total posts 19
The Monday night before the administrators were appointed I managed to use my Velocity points to book two business class flights on SQ Mel to Sin next March. Seats confirmed, hoping it will be honoured.
03 Aug 2019
Total posts 1
My understanding is that any points flights with Singapore Airlines (using Kris Flyer points or other eg velocity) will be automatically refunded (points plus taxes) if the flight is cancelled due to Covid-19. I have rewards flights booked with them in October / November to Cape Town, and think it's unlikely the flights won't be cancelled. On the one hand velocity points will likely have more value than virgin flight credit (but less than when you booked), alternatively you could contact them in advance of an automatic cancellation, and attempt to move the flights to later in the year or early next year. Would be interesting to hear how you go, if you do contact them in advance of an automatic cancellation. Rather than create more confusion, I would simply ask if a date change is possible now, as flying to London in July will not be feasible. May the force be with you !!!
Virgin Australia - Velocity Rewards
15 May 2015
Total posts 7
I am waiting on refund of taxes and charges on reward flights that were cancelled ONE MONTH before Administration. All I am getting is the run around from Virgin as they say it is up to the Administrator, I disagree as the refund is of charges they didnt actually pay as the flights never took place and the Federal Government rebated the charges in any case. I have asked AMEX to charge back, but as the bookings were quite old, I may hit the 120 day time limit there. The taxes are almost $1,000 , the points were credited back in march. The Administrator is using one rule to fit every situation despite paul Scurrah saying on April 21 they would not be 'refunding ' any $ after that date, they have been sitting on my money now for in some cases 6 months. Not Happy
Qantas - Qantas Frequent Flyer
26 May 2014
Total posts 465
I wasn't aware of a 120 day limit on Amex. I just entered claims for a number of disputed transactions, including VA bookings made in Oct 19. Domestic bookings and seat fees were processed almost immediately and refunds expected. Taxes and charges on Velocity award bookings are to be followed up with the merchant, so it appears that they (Amex) are treating payments to Velocity differently.
Qantas - Qantas Frequent Flyer
10 Jun 2016
Total posts 1
Hi
Does anyone know if the sale of Virgin will include the sale of Tigerair? I'm also wondering about travel credits with Tigerair if anyone can enlighten me.
Thanks
Jetstar Airways - Qantas Frequent Flyer
16 Jan 2020
Total posts 3
"Preserve goodwill"...surely this is a joke. Mark my words-the end is near for this crowd !
13 May 2020
Total posts 19
Just spent 40 minutes on the phone to Michael at the Commbank in Newcastle requesting a chargeback. He refused to provide one, stating that the federal government had declared a pandemic and a travel ban. I pointed out that there is a travel ban for most international travel, and asked him if the travel ban extended to domestic flights - ummmm errrr was the answer before blaming the government and MasterCard. I pointed out that Virgin was still flying, and if Virgin had decided to cancel a flight because of low numbers or demand then that was a business decision of Virgin; not a result of a pandemic or international travel ban. Complaint lodged with AFCA re refusal to process chargeback - will keep you posted
24 Sep 2019
Total posts 13
I hesitate to say this but I can, to a point, understand the confusion re: domestic travel. Most states have banned entry from non-residents undertaking non-essential travel. Hence it comes back to the government declaration of a pandemic, with subsequent border controls.
Qantas - Qantas Frequent Flyer
09 Jun 2017
Total posts 2
I have just had ANZ Bank refuse Visa chargebacks against the revised "conditional credit" saying that they have not received any updates from Visa to change the position of not allowing chargebacks due to government restrictions. I advised the bank that the "conditional credit" offer cannot be utilised as the SA government has closed our borders for the foreseeable future and not likely to open by the date stipulated in the "conditional credit" of travel needing to be completed by 15 August. I asked ANZ Disputes to take my case to their senior management to advise Visa on my behalf of this change in VA policy via Administrator and they told me that could not be done and my case will be closed and to take it up with Visa.
Did you get a response from AFCA regarding your complaint lodgement?
13 May 2020
Total posts 19
Hi, I took the case to AFCA and they have forwarded to the Commbank. i have received an email from Commbank that they are investigating. My complaint is different as I asked for Commbank to pay compensation equal to the flight rather than a chargeback This was based on incorrect information being provided. i will post as soon as I get an answer in the meantime a complaint to AFCA is free; multiple complaints may help resolve the Visa/Mastercard situation...... good luck.
Qantas - Qantas Frequent Flyer
09 Jun 2017
Total posts 2
Thanks landed in hong kong for the update. If you did not raise the case to AFCA as a result of Commbank's refusal to allow chargeback and it was for Commbank to pay compensation, had you already asked Commbank to pay compensation and they refused? Just curious as to what grounds you took the complaint to AFCA?
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