What Virgin Australia's voluntary administration means for travelers around the world
Australia's second-largest airline Virgin Australia has entered voluntary administration as of April 21, becoming the largest — but not the only — airline casualty of the ongoing coronavirus crisis thus far.
The airline grew to a fleet of almost 100 aircraft during its 20 years of operation and, for now, will continue to operate a limited schedule for flights that are considered by the Australian government to be essential. Accounting firm Deloitte has been appointed as the official administrator to investigate the airline's options. This process will allow the airline to attempt to restructure and seek outside investment after its current shareholders and the Australian government declined to provide aid.
Virgin Australia has an unusual ownership structure for an Australian airline wherein 90% of the airline is owned by foreign companies. Etihad Airways owns 20.94%, Singapore Airlines owns 20.09%, Richard Branson’s Virgin Group owns 10.42%, Chinese conglomerates HNA owns 19.82% and Nanshan owns 19.98%. The remainder of the airline is owned by investors.
Related: What should you do with your miles if an airline is going bankrupt?
Virgin Australia Velocity members
If you're a member of Virgin Australia's frequent flyer program, known as Velocity, know that it's a separate legal entity and has not been placed into voluntary administration. That being said, all options for redeeming Velocity points have been immediately suspended for a period of at least four weeks. The move to suspend redemptions followed a rush of members attempting to empty their accounts as the airline's financial position worsened.
You can still earn Velocity points by crediting flights operated by Virgin Australia or its partner airlines like Virgin Atlantic, Delta, Etihad, Alitalia, Hawaiian Airlines and Singapore Airlines, as well as cobranded credit cards, online shopping and more, though you will not be able to use those Velocity points for the foreseeable future. Do not be surprised if this suspension period is extended.
For now, travel credits also remain valid. However, you may feel more comfortable using existing travel credits to book a flight on a partner airline that is in a stronger financial position.
Virgin Atlantic Flying Club members
It's important to note that although both airlines share the Virgin name, they are separate airlines and legal entities. By fleet size, Virgin Australia is the largest airline in the Virgin Group. Interestingly, as both airlines share the same initials, Virgin Australia uses the two-letter airline code VA, which some travelers may confuse with Virgin Atlantic, which uses the airline code VS.
Richard Branson's Virgin Group owns a controlling stake in Virgin Atlantic (51%), while owning a minor stake in Virgin Australia (10.42%). The financial performance and ongoing viability of Virgin Australia has no impact on the financial performance and viability of Virgin Atlantic.
Virgin Atlantic Flying Club members can still earn and redeem Flying Club miles on Virgin Australia flights. The administration of Virgin Australia has just commenced, but for now, there is no change for Flying Club members. I would not advise redeeming any Flying Club miles on Virgin Australia flights, as these flights may not operate in the future.
For now, anyone with Velocity status can receive status benefits when flying with Virgin Atlantic. Likewise, Flying Club elite members can enjoy benefits when flying with Virgin Australia. Note that strict social distancing means benefits like lounge access are currently worthless while airport lounges are closed.
If you're taking a flight on Virgin Australia in the immediate future, you can still credit this to Flying Club if you wish. Indeed I would suggest doing this rather than crediting to Virgin Australia's Velocity program as right now, there is more certainty around the future of the Flying Club program than the Velocity program.
What about other partner airlines?
It's largely business as usual for Virgin Australia's airline partners and their respective loyalty program members. Delta SkyMiles members, for example, can still earn and redeem SkyMiles on Virgin Australia flights, noting the caveat above that it is risky using any miles to book Virgin Australia-operated flights in the future given the level of uncertainty around its financial position and flying schedule.
Elite members in partner airline loyalty programs can still receive status benefits when flying with Virgin Australia, and vice-versa, noting social distancing restrictions.
What about the rest of the Virgin Group?
The Virgin Group has diversified investments in dozens of different companies, from mobile phones to fitness centers and trains. The financial position of Virgin Australia has no bearing on the financial position of other Virgin Group companies.
Sir Richard Branson has published an open letter, stating that without government support, Virgin Atlantic would collapse because of the coronavirus impact. He also referred to Virgin Australia being in the same position.
The Virgin Group has chosen an unfortunate year to launch its Virgin Voyages cruise ship venture with cruise lines one of the hardest-hit industries.
Bottom line
This is a developing story as administrators move in and begin to examine the financial position of Virgin Australia and determine if the airline can be restructured, sold or liquidated.
Right now, other than the freeze on redeeming Velocity points, it's largely a schedule of operations during the coronavirus period. Hopefully, the administrators can work their magic so the airline can fly out of its current financial woes as a stronger airline. However, coronavirus has resulted in unprecedented difficulties for the travel industry, with airlines, in particular, being severely affected. Virgin Australia's significant financial difficulties started well before coronavrius did — the airline has lost money every year since 2012 — and administrators will have their work cut out for them solving these inherent problems in this difficult environment.
TPG featured card
Rewards
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 3X | Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com. |
| 2X | Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com. |
| 1X | Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases. |
Intro offer
Annual Fee
Recommended Credit
Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.
Rewards Rate
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 3X | Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com. |
| 2X | Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com. |
| 1X | Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases. |
Intro Offer
You may be eligible for as high as 100,000 Membership Rewards® Points after spending $6,000 in eligible purchases on your new Card in your first 6 months of Membership. Welcome offers vary and you may not be eligible for an offer.As High As 100,000 points. Find Out Your Offer.Annual Fee
$325Recommended 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.Excellent to Good
Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.