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Over the past few weeks, there has been some trepidation concerning Flying Club – the frequent flyer loyalty program of Virgin Atlantic.
Flying Club is extremely popular among points and miles enthusiasts for their great redemption rates on partner airlines. However, similar to every global airline, Virgin Atlantic is seeking financial assistance.
The only problem is that while many governments have come to the rescue of their airlines with bailouts, Virgin Atlantic hasn’t received a bailout, is (obviously) still searching for additional funding, and have said they are insolvent without any help.
In an attempt to conserve cash, many frequent flyer programs (including Flying Club) suspend partner airline redemptions.
Although difficult for passengers to understand, there is good reason for this. When you redeem Virgin Atlantic points for a flight on Delta, both airlines split the money. However, if you are attempting to save as much money a possible you do NOT want redemptions to happen as it would require you to pay out to the partner airline.
Well, approximately two weeks ago, Flying Club went offline and the message from Virgin was they were having “IT issues” and this was the reason that travelers weren’t able to even login. Additionally during this time, the ability to transfer points from credit cards (e.g. American Express) was suspended so there has been mass hysteria for those that have points “stranded” with Flying Club and/or had already redeemed miles on a partner for future travel.
I completely understand the fear because I am in the same boat as many others. I have two award tickets (booked via Flying Club) that are on hold right now.
Using the redemption example above, generally, an airline “pays out” when service is rendered. In other words, Delta would not receive their money from Flying Club until the passenger completed their flight. If a passenger books a redemption flight via Flying Club, but meanwhile goes out of business, Delta is not obligated to allow that passenger to fly because the ticket will never be paid out.
If you have a stash of Flying Club miles, you can still transfer them to Hilton or IHG but neither transfer is a good value. However, Hilton would be the better alternative, particularly if you don’t want to gamble with the possibility of losing all your points.
WHAT YOU NEED TO KNOW
As I’ve said in previous posts, there are many steps to this process. In the event that Flying Club does not find financial support, the company will file bankruptcy. However, that is not the same as liquidation.
Many times loyalty programs are spun off into separate programs and operate as their own entities. The miles will lose value but you’re not losing everything and the miles are technically “safe.”
In my estimation, I think that Virgin Atlantic (the airline) will survive and that Flying Club miles will survive. However, there is one caveat, I think we will see a change in their valuable partner redemptions (ANA, Delta, etc.). But given my optimism for the program, this is the reason that I personally have not transferred my points out to the various hotel programs.
Again, Flying Club is back online now so there is light at the end of the tunnel but Flying Club still has a lot of work ahead.
It’s worth noting that as of this writing points transfers from AMEX remain ‘temporarily suspended’ but it appears that Chase transfers have returned.
Are you excited to hear they are Flying Club is back online?