Virgin Australia travel credits to be honoured in full

Virgin's buyer promises the airline's travel credits will remain valid until mid-2022, as will 'conditional credits'.

By Chris Chamberlin , August 6 2020
Virgin Australia travel credits to be honoured in full

Existing Virgin Australia travel credits will remain valid until mid-2022 as private equity firm Bain Capital reveals its hand – and its vision – for a rebooted Virgin Australia.

Under Bain's plans, conditional credits and travel credits relating to bookings made during and prior to administration, respectively, will retain their value until July 31 2022, giving would-be travellers a significant window in which to use their credit's value.

As Virgin Australia accepts flight bookings up to 11 months in advance, passengers will be able to travel until June 30 2023 using those credits.

Virgin Australia customers "will be provided the value of their travel credits post administration with validity significantly extended to ensure they have plenty of opportunity to book tickets," CEO Paul Scurrah confirmed.

Mike Murphy, Managing Director at Bain Capital, adds, "we have worked closely with Virgin management since the binding agreement was signed to develop this strategy together for a stronger, more profitable and competitive Virgin Australia."

What's happening with Virgin Australia 'conditional credits'?

With 'travel credits' being vouchers issued prior to Virgin Australia's entry into voluntary administration, 'conditional credits' are those that have been issued during the administration process.

Vaughan Strawbridge, Lead Administrator for Virgin Australia at Deloitte, initially affirmed to Executive Traveller that the agreement with Bain is "to take on ... any of the travel credits (Virgin Australia) had prior to our appointment."

However, Deloitte has since clarified that "conditional credits still held after September 23 (currently a nominal date to mark the end of the Voluntary Administration period) will then be recognised as Future Flight credits by the new owner."

"Those credits would otherwise be an unsecured claim in the voluntary administration," Strawbridge continues.

As conditional credits were initially issued on the understanding that they may not necessarily be honoured by the airline's new owners, the news comes as a sigh of relief for credit holders, and means there's no rush to spend them while the airline remains in administration.

How about cash refunds?

While Virgin Australia's archrival Qantas has been reminded of its refund obligations by the ACCC in the event of cancelled flights, Virgin Australia passengers shouldn't be expecting refunds in the same way, the consumer watchdog warns.

"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," an ACCC spokesperson advises Executive Traveller.

"This means that consumers are not contractually entitled to obtain refunds instead of travel credits."

However, "the particular circumstances of some consumers means the no-refunds policy has resulted in significant hardship for them. The ACCC recommends these consumers contact Virgin after the current administration process has ended to request specific consideration of their circumstances."

Executive Traveller asked Strawbridge whether Virgin Australia customers would indeed be able to turn existing travel credits and conditional credits into full cash refunds, but the administrator took a similar line as the ACCC.

"I’m not aware of the intention to convert (credits) back into cash, or to refund the cash – that was never the intent. The intent is to provide the value to those customers, by giving them the access to those credits, that they can put towards new flights," Strawbridge says.

Of course, the ACCC's suggestion is to make such refund requests of the new owners after the administration period, not of the administrators while the airline remains in voluntary administration, so it would be for Virgin's new owners, Bain Capital, to decide.

Bain's other plans for Virgin Australia also include simplifying its fleet, ditching Tigerair Australia, honouring all Velocity Frequent Flyer points, and retaining "key" airport lounges.

Read: Bain's blueprint for Virgin Australia 2.0 revealed


A previous version of this article shared that the fate of 'conditional credits' was unclear, following an Executive Traveller interview with Virgin Australia's Lead Administrator, Vaughan Strawbridge at Deloitte, and Virgin Australia CEO Paul Scurrah.

Deloitte has since confirmed that 'conditional credits' issued during administration will be carried forward in the same way as 'travel credits' issued prior to administration. The article has been updated to reflect this, and to include commentary from the ACCC.

Chris Chamberlin

Chris Chamberlin is the Associate Editor of Executive Traveller, and lives by the motto that a journey of a thousand miles begins not just with a single step, but also a strong latte, a theatre ticket, and later in the day, a good gin and tonic.

Qantas - Qantas Frequent Flyer

09 May 2011

Total posts 345

I hope the ACCC do. If you have a booking for an international destination, and they have no plans to start long haul flying in the near future, we shouldn't be forced to use it for a domestic booking

Virgin Australia - Velocity Rewards

13 Jan 2015

Total posts 593

A friend of mine is in this predicament. Having paid for return flights to LAX in J they don't want to be forced to waste it on domestic trips they would never have otherwise taken.

NZ

13 Aug 2016

Total posts 59

Would be nice for them to find a way for people in New Zealand to use there Virgin Credits?

05 Aug 2020

Total posts 1

Any news on Tigerair credits?

I'm currently a VA Platinum and spend thousands of dollars a year flying Virgin in business class. Can I just say if they decide not to honor the conditional credits I will take much enjoy on NEVER spending another cent flying Virgin Australia in the future!

05 Aug 2020

Total posts 1

Does anybody know if VA have to legally provide refunds on cancelled flights to the USA, per the US DOT and refund laws? Sorry if this has been asked somewhere else!

15 Mar 2017

Total posts 14

I'm happy to be wrong on this. Honouring travel credits is good will on the new owners part. My understanding effectively this is a new business. The new owners could choose to ignore travel credits in preference to other creditors to get the sale approved. In doing so they would obliterate their customer base but I don't believe they are obliged to honour the credits

I would also expect the prices for flying will be a great deal higher for the next few years. So if you've paid for a trip before the travel credit you get won't replace the flights in the future.

01 Sep 2019

Total posts 1

What about when the international fare class we paid was flexible (full fare Premium) and normally allows for a cancel/refund but VA still not interested in our calls and emails - shouldn't we be better off than a travel credit that we might get to use on domestic someday?

Virgin Australia - Velocity Rewards

11 Dec 2016

Total posts 62

https://theconversation.com/amp/cutbacks-may-keep-virgin-australia-alive-for-now-but-its-long-term-prospects-are-bleak-141876

A really good write up of the VA Bain situation. Will be interesting to see how the future looks for VA.

Virgin Australia - Velocity Rewards

07 Dec 2014

Total posts 164

Maybe ET can ask Virgin what exactly this means (in the email received from them today regarding my travel bank):

"The Future Flight credit can be used for booking on Virgin Australia ...bookings using your credit will be subject to seat availability within the fare class reserved for Future Flight credits...."


Hi Guest, join in the discussion on Virgin Australia travel credits to be honoured in full