The 10 million members of Virgin Australia's Velocity rewards program can stand easy about the fate of their frequent flyer points, says airline-appointed administrator Vaughan Strawbridge of Deloitte, who has ruled out selling off the program "as an individual asset."
Speaking to media following this morning's confirmation that the airline had moved into voluntary administration, Strawbridge stressed that Velocity would be offered to Virgin's new owner as part of the overall airline deal.
"Velocity is an important part of the group and it's intended that as we go through the restructuring process that we offer that up as part of the package... there is no intent to run a separate process to look at selling that."
Lauding Velocity as "an incredibly good asset", Vaughan added that the scheme was "a key part of how this business is restructured and comes out of administration."
However, Virgin Australia CEO Paul Scurrah says a recent "run" on Velocity points, sparked by initial reports of the airline's request for a $1.4 billion Government bailout, has led to points redemptions being suspended until late May.
What sparked the run on Velocity points
The four-week freeze is intended "to stop the issue caused by a reduction on confidence" in the airline, Scurrah said. "I think there's a positive step today, which should give a bit of confidence, but we need to make sure we preserve as much value as we can as we get through this process."
"When our original request to the Government made its way into the newspapers there was a run on our frequent flyer program that we weren’t t able to slow down, and there was an increase on people wanting refunds, which was unfortunate, and despite our efforts we weren't able to to slow that down."
Deloitte's Strawbridge says he hopes to take "initial expressions of interest" in the new-look Virgin Australia "in the next three weeks", with a timetable to lock down a deal "a further four to five weeks" after that.
But the actual power of those Velocity Frequent Flyer points will be a choice for the airline's new owner, who could launch a spreadsheet-friendly if goodwill-killing devaluation of the program by increasing the number of points needed for an upgrade or a free flight.