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

April 27, 2020
7 min read
If you are worried about airline bankruptcy, here's how to burn through your miles now
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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.

Stay up-to-date on the outbreak by visiting our hub page for coronavirus coverage and signing up for our daily newsletter.

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?

Virgin Atlantic might be the next airline to disappear into thin air. (Photo by Daniel Ross/The Points Guy.)

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 programsAmerican 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

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TPG featured card

Best card for premium perks while traveling
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards

2 - 10X points
10XEarn unlimited 10X miles on hotels and rental cars booked through Capital One Travel
5X5X miles on flights booked through Capital One Travel.
2X2 Miles per dollar on every purchase, every day

Intro offer

75,000 bonus miles
Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel

Annual Fee

$395

Recommended Credit

740-850
Excellent
Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,300+ lounges, including Capital One Lounges and the Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023
Best card for premium perks while traveling
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

10XEarn unlimited 10X miles on hotels and rental cars booked through Capital One Travel
5X5X miles on flights booked through Capital One Travel.
2X2 Miles per dollar on every purchase, every day
  • Intro Offer
    Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel

    75,000 bonus miles
  • Annual Fee

    $395
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    740-850
    Excellent

Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,300+ lounges, including Capital One Lounges and the Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023