COVID-19 has shut down the world, with airlines one of the worst affected industries. Qantas and Virgin have stood down staff—around 28,000 combined—and most of the airlines’ planes have been grounded. With the future of the aviation industry in question, many travellers are wondering how this will affect their loyalty points. Can you still claim frequent flyer points?
How do frequent flyer points work?
Traditionally, airlines rewarded loyal customers with points when they flew on their aircraft. But in recent years, airlines have been earning revenue when they “sell” loyalty points to retailers or credit card providers. It is then deemed to be unearned revenue until members use their points purchasing products or booking flights.
In Australia, the Virgin Velocity and Qantas Frequent Flyer programs are extremely popular, with around 10 million and 13 million members, respectively.
Qantas Frequent Flyer program
Formerly known as the Captain’s Club, Qantas’ loyalty program launched in 1987 with around 50,000 members. It was initially designed for business travellers who wanted to earn and claim frequent flyer points on Qantas flights, but has expanded in recent years to include all Qantas passengers.
Points are accrued based on distance, with bonuses varying by travel class. You can also accrue bonus points by signing up for a credit card with one of their banking partners, and by linking your Qantas Frequent Flyer account with your Woolworths Everyday Reward card.
Points can be redeemed for flights or upgrades operated by Qantas, on other oneworld airlines, as well as via hundreds of non-airline partners. These include hotels, car rental companies, banks and retailers, and members can also use points to purchase items from the Qantas Store.
Flights with Qantas and its 38 partner airlines also earn Status Credits. An accumulation of these allows progression to Silver status (oneworld Ruby), Gold status (oneworld Sapphire), and Platinum and Platinum One status (oneworld Emerald).
Virgin Velocity program
The program was launched in 2005 by Virgin Blue (later Virgin Australia) as Velocity Rewards, with its partner the National Australia Bank offering a companion credit card. Initially, it differed from other frequent flyer programs because points earned were based on flight costs rather than distance. By 2007, points earned in loyalty programs operated by American Express, Westpac, Diners Club and ANZ could be transferred to a Velocity Rewards account.
Status levels were also introduced—Red, Silver and Gold—each with their own benefits. It was also the first Frequent Flyer program in Australia to offer “any seat, any time” reward flight availability. The number of points required to gain a seat directly corresponded to the current fare of that seat, allowing any seat that was available to be redeemed.
In 2011, the program was renamed Velocity and a Platinum status level introduced. In 2013, Velocity introduced the Global Wallet, the first travel money card in Australia, which could be used as a Visa prepaid card. Co-branded cards are now also offered by Virgin Money, Westpac and American Express.
The current state of play
The loyalty component of Qantas is the group’s second most profitable division behind its domestic airline operations. According to its 2019 annual report, it had $2.4 billion worth of unredeemed Frequent Flyer revenue in its accounts. And for Virgin, its Velocity program earned $122 million last year.
During the COVID-19 pandemic, loyalty members have been rushing to claim frequent flyer points, at a higher level than usual. This could significantly reduce the airlines’s unearned loyalty point revenue and be a drain on cash flow, with both Qantas and Virgin desperately trying to cut costs.
In April, the Australian government announced it would pay both airlines up to $165 million to maintain the most critical regional and metropolitan routes. The new funding comes on top of around $1 billion in earlier pledges for the aviation sector, including $298 million to keep regional airlines operating.
How to make the most of your points
In terms of earning points, is it usually by flying with Qantas, Virgin or their partner airlines, but given many flights are grounded, points can also be redeemed via other methods.
With Qantas, you can purchase alcohol at Qantas Wine or other products at their Qantas Store, but there are limits. Qantas customers are restricted to two individual product purchases a day, with the airline stating that it was to "ensure the continued availability of products to as many members as possible.”
Virgin has temporarily suspended point transfers, but is looking at "providing you with this program feature once flight schedules return to normal." You can still earn Velocity Points with their partners, but only on new redemption bookings to select destinations for travel from the 1st September 2020.
They have also limited gift card purchases to one a day, with gift card values $50 and below. Unfortunately, there are no other ways to claim frequent flyer points through Virgin at the moment, and the Virgin Rewards Store has been closed until further notice.
Other benefits being offered
Qantas is offering a 12-month membership status extension to eligible customers as of March 2020. And although all Qantas lounges have been closed until further notice, eligible Qantas Club members will automatically receive a six-month extension of their membership with a membership year anniversary date between 23 March 2020 and February 2024.
Virgin will be extending and preserving the current status of all of their Velocity Frequent Flyer Silver, Gold and Platinum members for a further 12 months. There will also be no minimum flight sectors required to maintain your status.
How to make sure your points don’t expire
With Qantas, your points won’t be frozen, so you need to make sure your account remains active by redeeming or earning new points over an 18-month period.
With Virgin, your points expire 24 months after the last date you earned or redeemed points or bought points using their Points Booster.
If the airlines go bust
If this happens, unfortunately customers will be treated as unsecured creditors and will lose all their points (similar to what happened when Ansett collapsed in 2001). However, it seems unlikely the Federal Government will allow the national carrier to go broke, and Virgin has asked for additional financial support to avoid collapse.
- Patrick Hatch, 2020, Qantas, Virgin tighten loyalty points spending, Sydney Morning Herald
- 2020, Coronavirus (COVID-19) travel updates, Qantas
- 2020, News Item: Update from Paul Scurrah - An update on Virgin Australia's response to COVID-19, Virgin Australia
- Josh Dye, 2020, Qantas and Virgin frequent flyer points: Everything you need to know during the coronavirus, Sydney Morning Herald