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Singapore Airlines will cut the 'exchange rate' for converting Virgin Australia Velocity frequent flyer points into its own KrisFlyer miles, in a move which reduces the transfer value of Velocity points and weakens a key component of the reward scheme.
As of 1 January 2019, transferring Velocity points to KrisFlyer miles will take place at a rate of 1.55:1, compared to the current ratio of 1.35:1.
The devaluation means that come the new year, 100,000 Velocity points will be converted into 64,516 KrisFlyer miles rather than 74,074 KrisFlyer miles under the current rate.
Singapore Airlines, which holds a near-20% stake in Virgin Australia, says "the change in conversion rate reflects the differing reward program currencies within which each airline program operates and transacts."
The same reduced rate also applies to swapping KrisFlyer miles for Velocity points. "Receive 1 Velocity Point for every 1.35 KrisFlyer miles converted before 1 January 2019; after 1 January 2019, you will receive 1 Velocity Point for every 1.55 KrisFlyer miles converted," according to the KrisFlyer website.
A blow to Velocity's value proposition
The points-swap partnership was launched to much fanfare in 2014 and was said to mark the first time that two airlines had arranged for a direct transfer of points between their frequent flyer schemes.
Being able to convert Velocity points to KrisFlyer miles was widely considered to be one of the most appealing features of Virgin Australia's frequent flyer scheme. It opened the door on points-based award bookings and flight upgrades not only with Singapore Airlines but right across the Star Alliance with premium partners such as ANA, Lufthansa, Swiss and Thai Airways.
Likewise, it allowed business travellers flying with several different Star Alliance airlines to funnel their points into their Velocity account by firstly crediting each Star Alliance trip to KrisFlyer and then sweeping the combined points balance across to Velocity.
Savvy frequent flyers planning to swing their Virgin Australia points across to Singapore Airlines should consider doing so before the end of 2018 in order to maximise their KrisFlyer haul.