Why you might NEVER get a refund from Virgin Australia: Airline plans to hand customers credits instead of cash for cancelled flights
- Virgin Australia customers waiting for refunds may only receive travel credit
- Ceased issuing refunds and credits after going into voluntary administration
- Administrator proposes to compensate customers with conditional travel credit
- Decision whether to honour Virgin credit and refunds will be up to new owners
- Here’s how to help people impacted by Covid-19
Hundreds of thousands of Virgin Australia customers left out of pocket due to cancelled flights may never see their money again.
The embattled airline ceased issuing refunds and travel credits for flights grounded by the coronavirus pandemic after it went into voluntary administration in April.
Accounting giant Deloitte has received 340,000 refund requests from customers since it took control of the cash-strapped airline after 65,000 flights were cancelled between March 1 and April 30.
Administrator Vaughan Strawbridge has proposed to compensate affected passengers with 'conditional travel credit' rather than cash refunds in an affidavit filed to the Federal Court on Tuesday.
Virgin Australia passengers owed a refund for cancelled flights may not get their money back. Pictured are passengers checking in at Brisbane Airport on April 21, the day the cash-strapped airline went into administration
The credit would be valid while the airline is in administration.
Customers who have not claimed or used their credits during the process will be 'unlikely to receive a 100 per cent refund on any restructuring or upon liquidation'.
'The Conditional Credit scheme offers those customers the possibility of realising 100 per cent of the value of their refund by using the credit on a future flight or holiday package,' the court application states.
Mr Strawbridge added credits were 'necessary to preserve as much goodwill associated with the Virgin brand and business as possible for a buyer'.
The decision whether to honour Virgin travel credit or give a refund will be up to its new owners.
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The coronavirus pandemic resulted in the collapse of Virgin Australia. Pictured is an empty Virgin Australia check-in area at Brisbane Airport on April 21
'Potential buyers may be motivated to extend these conditional credits as part of any restructuring or recapitalisation of the Virgin Companies' business for the purposes of maintaining and enhancing the customer goodwill associated with the Virgin Companies,' Mr Strawbridge said.
Of the 19 parties that have expressed interest in buying the airline, eight signed confidentiality agreements to gain access to Virgin's books.
Apollo Global Management, Oaktree Capital Management, Indigo Partners, and BGH Capital are among the potential buyers.
The court application also seeks to limit the administrators' liability for debts incurred from Virgin and for essential services such as ground handling, fuel, maintenance and in-flight catering.
The case will be heard in the Federal Court on Wednesday.
Virgin Australia administrators seek to compensate affected passengers with 'conditional travel credit' rather than cash refunds. Pictured are grounded planes in Sydney on April 22
