Reader Question: “I’m Worried About My Frequent Flyer Miles. What Should I Do?”

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The current pandemic has brought the travel industry to it’s knees and many travelers (understandably) have questions about aspects of the airline industry. 1TP subscriber Dana asks:

I feel like I’ve grown leaps and bounds since I started following your blog. I felt like I was getting the hang of things and my confidence was growing…until Covid-19. With the coronavirus and all these airlines in search of bailouts, I realized I have no idea what is going on. hahaha I’m worried about my frequent flyer miles, particularly my Virgin Atlantic miles. I saw a video online about Mr. Branson not being able to get funding. You have me amped about the ANA business class redemption and Japan. What should I do?

This a great question. First, I know the world feels like it’s caving in but I would not panic as there are some options.

BACKGROUND

As you already know, COVID-19 has disrupted the travel industry and many airlines are searching for funding.

Richard Branson, in fact, did release a video that said the airline would collapse without government support (…which is similar to every other airline in the world). Understandably, many people are wondering what happens to their miles if an airline, Virgin in this case, goes out of business.

MY RESPONSE

In short, there are four ways to think about this (with a focus on Virgin):

  1. redeem your miles now for Virgin unique experiences
  2. redeem your miles now with travel partners
  3. the loyalty program survives bankruptcy but is acquired in a merger = the miles will survive
  4. the airline disappears, so do the miles

But let’s go one-by-one and discuss these options.

Option #1:

If you find yourself with A LOT of Virgin miles and want to redeem them as fast as possible, Virgin has a dedicated page for unique experiences including:

  • Kasbah Tamadot: For 255,000 miles, you can stay 3 nights in Branson’s Mountain Resort in Morocco
  • The Lodge: For 380,000 miles, you can stay 3 nights in Branson’s resort in Switzerland
  • Mahali Mzuri: For 600,000 miles, you can stay 3 nights at Branson’s luxury safari in Kenya (or 850,000 miles for 5 nights)
  • Mount Rochelle: For 180,000 miles, you can stay 3 nights at Branson’s winery in Capetown, South Africa
  • Necker Island: For 1,500,000 miles, you can stay 7 nights at Branson’s 74 acre, private island in the Caribbean.

Branson obviously loves Africa! And yes, if you’re old enough to remember, Necker Island was featured on MTV Cribs where Mariah Carey just happened to be staying there and is Branson’s full-time residence.

Option #2:

You can redeem your miles on Virgin Atlantic flights but it’s worth noting that this may not be the “best” idea considering the airline may go out of business in which case you would lose all of your miles.

Virgin (A350 Business Class)

Additionally, you can redeem your miles at IHG or Hilton (1:1 and 2:3, respectively). Although this is a safe bet, these are terrible value propositions for your points (albeit better value than zero should the airline go bust).

Finally, you can redeem your miles on airline partners (e.g. Delta, ANA, etc.), however, there is a big caveat. Airlines, generally, aren’t paid until the ticket is redeemed. Let’s say that you redeem Virgin Atlantic miles for an ANA ticket for a flight in January 2021, but Virgin goes out of business today, there is a high chance that ANA will not honor the ticket because Virgin never paid them for the ticket.

ANA (new) Business Class

Option #3:

You could just leave your miles in your account. Many frequent flyer programs operate as a separate entity from the airline. In this case, Virgin Atlantic Flying Club (the loyalty program) is separate from Virgin Atlantic Airlines (the carrier). This can be a positive aspect because your profile includes a lot of rich data including where you enjoy traveling, how you book your tickets, how often you travel, etc.

Given the frequent flyer program is separate, other airlines are willing to pay top dollar to acquire this high-value information so the frequent flyer program can survive long after an airline goes bust.

Option #4:

I think this option is self explanatory. Although the programs operate separately, there is limited value for a loyalty program that does not have an associated loyalty program. Thus, your miles could render useless if the airline goes bust and the program is not acquired.

FINAL STAMP

Recently, I redeemed my Virgin Atlantic Flying Club miles for a round-trip ANA first class flight. Unfortunately, I had to cancel the trip because of the pandemic.

Although, the Virgin experiences and Delta One Suites sound great for redemptions, I am solely interested in ANA first class.

Although Virgin Atlantic is a sizable company, there is no guarantee that it will survive. However, I’m willing to take the risk in losing my miles. Personally, I don’t think Virgin will go out of business but my personal opinion is not a guarantee.

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