Virgin Australia unlocks Velocity frequent flyer points for redemption on domestic flights

Virgin Australia's 10 million Velocity frequent flyer members can now redeem their points on domestic flights as the airline attempts to restore confidence and its new ownership structure edges closer to being finalised.

The collapsed airline, which entered administration in April, is working with administrators Deloitte to determine its future with preliminary bids for the airline due on Friday evening.

The collapse led to Velocity holders having their accounts effectively frozen because they were unable to redeem their points on flights or products, though they were still able to earn new points.

From Friday, fully refundable Velocity reward seats can be booked for flights departing from September 1, with the airline hopeful of bringing that date forward if restrictions ease sooner than expected.

While Virgin's new flight network will not reflect pre-coronavirus levels, routes available include flights between major airports Sydney, Melbourne, Brisbane, Perth, Adelaide, Cairns and the Gold Coast. Flights to regional centres including Townsville, Mackay and Broome are also scheduled to operate. There are no flights to Tasmania available.

Bookings will be fully flexible. All change and cancellation fees will be waived if passengers change their mind anytime until September 1 with all Velocity points and taxes paid fully refundable.

"We're hopeful that domestic travel restrictions and state and territory border lockdowns ease by September and for many of us, a local holiday and catching up with interstate family and friends will be well overdue," a Velocity spokeswoman said.

The announcement reflects the airline's attempt to restore confidence as the administration process gets to the pointy end and prospective owners make their first offers.

Despite the generous booking policy, travellers still face the risk of losing money on other costs such as prepaid accommodation and transport if the flights are cancelled or schedules substantially changed.