Virgin Australia is expected to come under pressure to unlock refunds for cancelled overseas flights from this Friday as the airline moves out of administration and into the formal ownership of Bain Capital.
While its domestic network will remain – albeit in a smaller, leaner form – short-range flying to the likes of New Zealand, Bali and Fiji will be off the cards until borders open and demand returns.
However, Virgin isn't expected to restart longer-range international flying for some years and has axed its international fleet of Boeing 777s – which flew from Sydney, Melbourne and Brisbane to Los Angeles – along with the Airbus A330s, one of which was slated for the planned daily service between Brisbane and Tokyo
This has left many Virgin Australia passengers on cancelled LAX and Tokyo flights holding thousands of dollars in bookings for routes which the airline won't be covering in the near future.
Virgin has said that all outstanding flight credits will be honoured under Bain and converted to what it terms Future Flight Credits – although these will be harder to use than conventional travel credit vouchers, with only a certain number of seats on any given flight earmarked for Future Flight Credit redemption.
While this still allows passengers booked on now-cancelled domestic flights to jump onto another local Virgin flight in the future, those credits will be far less useful for travellers who had booked business trips or holidays to the USA or Japan.
A Virgin Australia spokesperson told Executive Traveller that "for bookings made prior to the Virgin Australia Group entering administration, our ability to provide a refund or remedy under our usual terms and conditions is impacted, and we’ve communicated directly with guests who held bookings on services to and from Los Angeles and Tokyo Haneda."
However, the spokesperson noted that "further information regarding their options will also be made available following the second creditors’ meeting" scheduled for this coming Friday, September 4.
Partner airlines an option?
In a statement on August 5, Virgin noted that while it would "continue to suspend flights to Los Angeles and Tokyo with the intention to recommence and grow long-haul flights when sufficient demand returns, customers will continue to have access to international markets through the airline’s codeshare partners."
This could open up the possibility of travellers being rebooked onto flights to Los Angeles operated by Delta Air Lines, and to Tokyo by new partner ANA.
A spokesperson for the Australian Competition and Consumer Commission told Executive Traveller that Virgin Australia’s "terms and conditions prior to administration did not provide for consumers to be given refunds for flight cancellations outside of Virgin’s control, such as COVID-19."
"This means that consumers are not contractually entitled to obtain refunds instead of travel credits."
However, "some consumers may have particular circumstances that mean obtaining any form of credit rather than a refund will result in significant hardship for them."
"The ACCC recommends consumers in this position contact Virgin after the current administration process has ended, to request specific consideration of their circumstances."