If you’re a member of Virgin Australia’s Velocity frequent flyer program, you’re probably aware of the ability to transfer KrisFlyer miles into Velocity points and vice-versa.
There were always a couple of catches – firstly to even be eligible for a Velocity account you need an address in one of their primary markets like Australia or New Zealand, and secondly whichever direction you moved miles you lost out with a 1.35:1 transfer ratio.
From 1st January however, the conversion rate will get much poorer as it shifts to 1.55:1, a significant devaluation.
Here’s the announcement from earlier this week relating to the changes.
Why would you do it?
Generally there is no good reason to convert your KrisFlyer miles to Velocity points, broadly speaking they are worth less and you’re taking a conversion hit on top of that. There are circumstances however where it might be considered. For example if you have a large KrisFlyer balance this is one way to use them to redeem into Etihad’s A380 apartments.
It’s not cheap, a flight from Abu Dhabi to London in this cabin for example will set you back 78,000 Velocity points, so you’d need to convert 105,300 KrisFlyer miles to make it work under the current 1.35:1 transfer rate. After 1st January 2019 it’s even worse with the 1.55:1 transfer rate kicking in you’d need to transfer 120,900 KrisFlyer miles for the same trip, a full 15% more.
If it is something you would consider however it may be worth moving the necessary miles over to Velocity before the end of December 2018, assuming you have a Velocity account or are eligible for one.
As a point of comparison alternative redemption rates for the same flight sector in Etihad’s A380 apartments are 87,750 Etihad Guest miles or 62,500 American Airlines AAdvantage miles.
On the other hand if you have a lot of Velocity points for whatever reason and you had your eye on a KrisFlyer redemption, you’ll get much better access to award seats including Singapore Airlines A380 Suites by transferring your points into KrisFlyer miles. Again it would make sense to do this before the end of the year to take advantage of the better ‘exchange rate’.
Remember if you transfer from KrisFlyer into Velocity those points will be valid for at least 2 years, however all your Velocity points stay ‘alive’ provided you transact in the scheme at least once every 2 years – so it’s a worst case scenario.
Transfer Velocity points into KrisFlyer miles on the other hand, and they’ll last 3 years.
While we’re talking about miles expiry, many of you will recall our analysis in August this year outlining 12 methods to extract the best value from any KrisFlyer miles you may have which are expiring (i.e. coming up to 3 years since they were earned).
Two of those methods involved the Virgin Australia Velocity scheme, for those eligible to be a member.
The first, a straight transfer to Velocity points, yielded a value of around 1.33 cents per expiring mile, provided you would then use them in that scheme of course. That took account of the approximate value of a Velocity point against an economy redemption, plus the hit with the conversion rate.
The second method was a bit sneakier, transferring your expiring miles to Velocity then simply transferring them back to KrisFlyer. Though you would lose 45% of your miles due to taking the conversion rate hit in both directions, the 55% you had left back in KrisFlyer were then good for another 3 years.
Obviously both of these methods become less attractive and less valuable from 1st January 2019 when the revised transfer rate comes into force.
In the first instance transferring your expiring miles to Velocity and using them there will now only yield a value of about 1.16 cents per mile (though that remains better than many other options).
Doing the double transfer to get as many of your expiring miles back into KrisFlyer with 3 more years of validity takes a bigger hit, as the conversion is devalued in both directions, meaning that instead of returning a value of 1.10 cents per expiring mile, this method will now get you only 0.83 cents per mile.
There is therefore no use for this method anymore as a transfer to Tap for More points and back to KrisFlyer miles yields a better value. See our expiring miles article for full details on that and the other options if your KrisFlyer miles are expiring.
Did Velocity points just become poorer value?
Chris at Australian Business Traveller wrote this morning about a new carrier surcharge being applied to bookings on Virgin Australia flights made with Velocity points, also starting on 1st January 2019.
If you’re considering shifting any KrisFlyer miles across to Velocity at the current rate with a Virgin Australia redemption in mind sometime next year, bear this in mind.
KrisFlyer to Velocity transfers (and vice-versa) aren’t of much interest to most of our readers, but if you have expiring miles, or have your eyes set on a redemption that is only available through the ‘other’ scheme than the one you currently hold miles in, you should certainly now consider whether you want to shift a block of miles across.
After 1st January 2019 the rate becomes even more unattractive than today, so act before the end of the year if you do decide to take advantage of this transfer option.
Hat tip to The Champagne Mile.
(Cover Photo: Damien Aiello)