The partnership between American Express Membership Rewards and Virgin America was announced several weeks ago but without many details at the time. Those details were expected to be announced by October 5, 2011, when the partnership was supposed to be fully in effect. Apparently the numbers came out a bit early and The Points Guy noticed the rates. Wow do they suck.
The conversion rate is 200 AmEx MR points -> 100 Virgin America Elevate points. Virgin America’s Elevate program has relatively fixed redemption values for the points, topping out around the 2 cents/point range. With this conversion factor the AmEx points are topping out at 1 cent/point and can actually do rather worse. That’s a pretty bad rate of return on those points.
It is even more crazy when you consider American Express also has a buy with points option that natively values the points at a penny each (1.25 for Platinum/Centurion card holders) and buying via that method actually is seen by the airlines as a revenue ticket so one earns more points (the native program points, not Membership Rewards points) for flying on that flight.
The only slightly reasonable explanation for why one would transfer AmEx points into Elevate at these rates is if you’ve got almost enough for a reasonably high-value award already and you just need to top off the account. Otherwise it is quite a bad deal.
This change, coming on the heels of Continental exiting the program as a redemption partner and the impending doom of devaluation for US-based earners in the British Airways Avios conversion, doesn’t really do much to offset the losses in the Membership Rewards program.