Imagine paying for a product or service that you never received, and then finding out years later that the company is keeping your money because you missed a deadline.
That’s exactly what happened to thousands of Virgin Australia customers last week.
When Covid ground flights across the country, many passengers were given a travel credit in exchange for cash bookings, ensuring the money remained locked up within the airline until it was used on another flight.
At midnight on 30 June 2026, Virgin made its Covid credits permanently set to expire. A few months earlier, the airline reported that $93 million was still unclaimed.
Ironically, in the same week that Virgin canceled the last of its Covid credits, more than a million Qantas customers were notified of their share of a $105 million class action lawsuit, the result of Qantas failing to properly refund customers for canceled Covid flights.
Qantas customers can also continue to convert unused credits into cash at any time without any deadline.
So how did Virgin manage to convert unclaimed Covid credits into its profits when Qantas is in the process of paying out $105 million for attempting something similar?
Cash deposit, loan issuance
Between 2020 and 2022, Virgin issued around $1 billion in Covid travel credits due to flight cancellations due to the pandemic.
But while customers initially paid cash for their flights, they were never offered an equivalent cash refund.
Instead, Virgin kept the money as a travel credit that could only be redeemed for another Virgin flight booking. And just over a week before the deadline, it was necessary to book a ticket and fly by June 30, 2026.
Months before the June 30 deadline, the airline reported that more than 90 percent of the pool had ultimately been repaid, leaving an outstanding amount of $93 million.
An expansion that wasn’t really an expansion
To be fair, Virgin hasn’t always stuck to one fixed deadline. The airline extended the credits four times in total, giving passengers years rather than months to use them.
The last of these four extensions came just over a week before the deadline as political and public pressure mounted.
With much fanfare, Virgin announced it was moving its loan repayment window to May 2027 – that’s 11 months of extra flying time, but what’s the catch? Reservations must be made by midnight on June 30th.
As a result, Virgin didn’t have enough time to contact all the people who had forgotten their credit existed, let alone convince them to plan and book a trip.
Virgin’s route card has also changed significantly since the early pandemic, when many of these credits were first issued.
A customer who booked a regional flight or interstate business trip on a now-defunct route in 2021 doesn’t necessarily want to board Virgin’s new flight from Canberra to Bali to keep their money from disappearing.
“Sleeping” passengers who were left behind
Of the $93 million in remaining Covid credits Virgin reported in the months before the deadline, more than 90 percent belonged to accounts that had not recorded any activity at the airline for three years or more.
In other words, customers who were checking their accounts or were still flying regularly on Virgin had, in most cases, already claimed the amounts they were owed.
The remaining money belonged almost entirely to people whom the airline had not heard from for many years.
It’s likely that many of these accounts had outdated contact information attached to them, including old email addresses and phone numbers that have long since been disconnected.
Virgin said it planned to step up efforts to contact customers in the days leading up to the deadline, although it is unclear what contact methodology it actually used.
And in three years, it’s safe to assume that some of these passengers will almost certainly have lost the ability to travel or gone abroad without a forwarding address.
How Qantas set a precedent
Of course, Virgin was not the first Australian airline to try to retain outstanding Covid credits. Qantas came first and they got caught doing it.
Back in 2023, Qantas came under enormous pressure over its handling of travel loans issued during the pandemic. As a result of public outrage, political scrutiny and a class action lawsuit, the company eventually committed to returning the money.
Today, Qantas Covid Credits can be converted into cash without a complicated expiration date.
At the same time, Echo Law is notifying eligible customers that it will participate in the Covid class action payout after Qantas agreed to settle it earlier this year.
It was against this precedent that Virgin decided to allow its loans to expire.
Virgin’s defenders will argue that the circumstances were different, and to some extent this is true.
The airline went into voluntary administration during the pandemic before being acquired by Bain Capital. Unlike Qantas, it has struggled to survive and many Australians understandably want the second major airline to survive.
But passengers who booked Virgin flights during the pandemic did not sign up for a Virgin top-up.
Most were forced to accept travel credits in exchange for cash because Virgin left them no other alternative.
Australia’s aviation consumer protection blind spot
Australia lags significantly behind when it comes to airline passenger rights, especially compared to overseas jurisdictions that offer stronger legal protections in the event of a flight disruption.
There are signs that the situation is beginning to change. Despite opposition from some in the aviation industry, new aviation consumer protection laws are currently before the federal parliament and aim to create an independent aviation ombudsman system and strengthen passenger protection.
An incident like this helps explain why reform is necessary.
Under its own terms, Virgin had every legal right to wipe out tens of millions of dollars in unclaimed passenger money. However, Australians are right to question why one major airline continues to issue Covid travel credit refunds indefinitely into the future, while another has canceled them entirely.
Virgin’s future financial results should show how much of the remaining $93 million was converted into revenue. This is a good result for money that the airline never had.
Adele Eliseo is a leading voice in the Australian loyalty and rewards industry and an advocate for frequent flyer literacy.
As the founder of Pointify and The Champagne Mile, she has spent a decade demystifying airlines and rewards programs to help Australians unlock the real value of their points.
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