If you are worried about airline bankruptcy, here's how to burn through your miles now

The ongoing spread of the COVID-19 virus is disrupting air travel in a way we’ve never seen before. Even with massive amounts of financial aid and major schedule cuts, airlines are struggling to stay afloat and there's no doubt that not all will make it out alive on the other side of this.

In early March, British airline Flybe became the first airline to collapse in the wake of the outbreak, followed by U.S. regionals Compass Airlines, RavnAir and Trans States Airlines soon after. Then, on April 21, Virgin Australia entered voluntary administration (the Australian equivalent of bankruptcy restructuring), becoming the largest airline casualty thus far.

There's much speculation, including from Delta CEO Ed Bastian, that Virgin Atlantic will be the next to shutter its doors. Virgin Atlantic's founder Richard Branson has even admitted that the airline will collapse without financial support from the government.

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As the future of Virgin Atlantic and other airlines becomes more uncertain, many frequent travelers are understandably beginning to worry about what will happen to their miles if their favorite airline goes out of business.

Henry Harteveldt, travel industry analyst and president of Atmosphere Research, explained to TPG that there are two possible outcomes for frequent flyer miles when an airline goes bankrupt. In short, the miles will either survive if the bankruptcy is resolved, such as in the form of a merger, or they may disappear if the airline evaporates into thin air. Although many frequent flyer programs operate separately from the airlines, including Virgin Atlantic's Flying Club and Virgin Australia's Velocity, the miles typically become unusable and lose all value once their sponsoring airlines go under.

If you're worried that an airline may go bankrupt and no other airline will take over the operation, your best bet would be to redeem all of your miles as soon as possible.

Related: What should you do with your miles if an airline is going bankrupt?

Flying Club redemptions still available

As of now, you can still earn and redeem Virgin Atlantic Flying Club miles as per usual. Unlike some programs which have either frozen redemptions entirely or limited non-flight redemption options, you can still use your miles for things like train tickets, wine, gift cards and more. You can also still transfer your miles to hotel partners like Hilton and IHG.

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It should go without saying that you'll get the greatest value from your miles with flight redemptions. Although booking Virgin Atlantic flights might not be a good idea, you can consider making a future booking on a partner airline like Delta. Some sweet spots in the Flying Club program include Delta One Suites to Europe for 50,000 miles + $5.60 one-way and cheap premium-cabin awards to Japan on ANA. Just know that you might not be able to change or cancel the reservation in the future if the airline has gone bankrupt. Although less likely, there's also the risk that the partner airline may not honor reservations from a now defunct airline, as was the case with some Star Alliance carriers when Avianca Brazil went bankrupt last year. There's a chance that Delta's 49% stake in the airline results in Flying Club miles still being redeemable for Delta flights if Virgin goes down, similar to how Etihad extended the ability to book on its flights using topbonus miles after Air Berlin ceased operations, but there's no guarantee that this will happen.

Related: TPG Points Lab: Save miles booking Delta awards with Virgin Atlantic

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While the transfer ratios are suboptimal, transferring your miles to a hotel partner should be a safe bet and won't require you to commit to a trip right now. You can transfer Flying Club miles to Hilton Honors points at a ratio of 2 miles to 3 points, meaning you'll get 0.9 cents of value per Flying Club mile based on TPG valuations. Flying Club miles transfer to IHG Rewards points at a 1:1 ratio so you'll get 0.5 cents per point.

Related: Not traveling for now? How to maximize your reward points on non-travel redemptions

If you find yourself with hundreds of thousands (or millions) of Virgin Atlantic miles, here are some more unique experiences you can trade them in for:

• Virgin Balloon Flights: 30,000 miles will get you a three- to four-hour ballooning experience.
• Mount Rochelle: Stay at Sir Richard Branson’s Cape Town winery for three nights for 180,000 miles.
• Kasbah Tamadot: Spend three nights in Branson’s Atlas Mountain retreat in Morocco for 255,000 miles.
• The Lodge: Stay three nights in one bedroom of Branson’s nine-bedroom Swiss Alpine resort during the summer for 380,000 miles.
• Mahali Mzuri: Spend three nights in a “luxury tent” at a Kenyan safari camp for 600,000 miles or five nights for 850,000 miles.
• Ulusaba Private Game Reserve: 600,000 miles for a three-night stay for two people in a Safari Lodge room or 850,000 miles for a five-night stay for two people in a Safari Lodge room

If you have 2,000,000 miles (earned entirely from Virgin Atlantic flights) you can enter for a raffle to fly in space on Virgin Galactic once commercial flights begin operating. Alternatively, you can donate as few as 2,000 Flying Club miles to WE (formerly Free The Children).

Bottom line

Being a 1:1 transfer partner of most major transferable points programs — American Express Membership Rewards, Chase Ultimate Rewards, Citi ThankYou Rewards and Diners Club — the Flying Club program has been an integral part of many award travelers' rewards strategies. With over 8,500 employees and a fleet of over 40 aircraft, there's a fair chance that the airline and its loyalty program wouldn't simply disappear, but if you're worried about its fate and are sitting on a stockpile of miles, you may want to play it safe and empty your account while you still can.

Related: What you can do when your airline goes belly up