Virgin Australia Velocity Frequent Flyer points can now be used to pay for petrol

Virgin Australia has announced members of its Velocity Frequent Flyer program will be able to pay for petrol with their points, starting from next week.

The airline said that members would be able to redeem between $10 and $60 off eligible fuel and other in-store purchases at participating BP service stations. $10 worth of purchases will cost 1667 Velocity Points.

Members will need to create a PIN at the Velocity website and then swipe their card in store at BP before payment.

This will mark the first time an Australian airline loyalty program has allowed its members to use their frequent flyer points as currency in a retail store and one of the first times in the world and airline has done so.

There has long been talk among airlines around the world of using their points programs as an alternative currency, but the idea has largely failed to take off (no pun intended).

The main problem is that, unlike national currencies which have the backing of governments and reserve banks behind them, airlines are free to value their points however they like - making members wary of treating the points like money.

In 2013, US airline Southwest upset consumers by suddenly devaluing the worth of its frequent flyer program points. Other airlines occasionally change the rules of how you can use your points or how long you have to use them.

Virgin Australia has made several changes to its Velocity program this year, including decreasing the number of points needed for long-haul economy class flights and reducing the expiry date for points on accounts with no activity from three years to two. In April, the airline announced members would now be able to book flights on budget carrier Tigerair with Velocity points.