With Virgin Australia now in bankruptcy reorganization (administration) and no longer allowing redemptions from the Velocity program, another shoe has dropped – customer refunds for cancelled flights.
In this article
Virgin Australia Won’t Be Refunding Customers for Cancelled Flights
The Sydney Morning Herald reports that “while some customers would normally be eligible for cash refunds, Deloitte has proposed a policy where all customers who booked flights before Virgin entered administration and are yet to receive a refund or credit will be given a “conditional travel credit” of the same value.”
They go on to say that even these vouchers could be nullified once the carrier emerges from administration. Put another way, even if the airline is rescued, passengers funds may not be.
That will ultimately come down to who the buyer of the airline is and what they agree to. In bankruptcy reorganization, all debts are on the table for being written off.
While Virgin Australia customers owed a refund for cancelled flights are technically owed a cash refund, the administrators are proposing that all customers that bought flights before Virgin went into administration would only get a voucher and that voucher is only guaranteed to be useable while Virgin Australia is actually in administration – during a time the airline may not even actually fly – and with no guarantee that the restructured airline post-bankruptcy would even honor the vouchers. The new buyer could honor the vouchers or even provide the cash refunds due – or neither.
Wow.
What can you do? What could you have done?
For the most part, this is out of any customer’s control. If you charged the flight to a credit card, you should definitely file a charge back for services not rendered – ASAP. There’s no guarantee you’ll get the money back this way, but you might.
Your travel insurance may cover this – or it may have an exclusion for insolvency of the airline or they might offer it for some airlines but not all airlines. It’s a huge “Your Mileage May Vary” situation. But one thing is for sure. If you paid with a debit card, your money is gone.
Always, always, always pay for travel using a credit card so you at least have the option of trying for a charge back.
Virgin Velocity
There could also be big changes to the Velocity program or, if the airline can’t be saved, that would most likely fold as well. However, if it’s acquired, it is unlikely that any buyer would decimate such a valuable asset. You can’t cash out Velocity points right now, but if the airline is saved, the miles should still be good.
Looking Forward
I realize that most of my readers are US-based and very few are in Australia. I wanted to highlight this situation because Virgin Australia won’t be the last airline in bankruptcy this year. Heck, even the Boeing CEO made the bold prediction that a major US airline won’t survive COVID-19. He didn’t indicate if he had thoughts on the most likely candidate.
Many airlines have been playing games with refunds. United has probably been the worst offender in the US. British Airways has made it notably difficult to get refunds. Qatar is defaulting to vouchers but will convert them to cash if you ask. Avianca is in bankruptcy reorganization.
Long story short: Even when airlines have been refusing refunds, many customers – via pure persistence – have been able to get them anyway. If you have had a flight cancelled and were given a voucher, keep trying to get a refund in cash. This won’t work for Virgin Australia customers at this point, but it should for most airlines.
Have you been stuck with an airline voucher when you wanted a cash refund?
Let me know here, on Twitter, or in the private MilesTalk Facebook group.
You can find credit cards that best match your spending habits and bonus categories at Your Best Credit Cards.
New to all of this? My “introduction to miles and points” book, MilesTalk: Live Your Wildest Travel Dreams Using Miles and Points is available on Amazon and at major booksellers.
