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A Traveller’s Guide - Air Miles
Finance - Travel

Air miles are considered the world's largest currency. Yet trillions of air miles go waste due to inadequate information.

Frequent flying may mean at times stiff limbs and a severe jet lag, but it also offers an opportunity to travel free. Airlines are nowadays aggressively pitching their frequent flyer programs (FFPs or air miles) to earn passenger loyalty. The funda is simple—while passengers fly more than usual to earn a free journey, the airline gets to boost its revenue kitty and brand image.


Yet, with personal lives becoming busier than ever before, it's practically impossible for travellers to keep track of air miles. A person in the corporate world works for at least eight hours a day, travels two times a month, manages family's money matters—so, how can one expect them to be aware of what airline loyalty programs have on offer and how can they maximise the travel experience at minimal expense.


Today there are over 70 airline FFPs worldwide, and a complicated network of airline alliances and partnerships. In India, Kingfisher Airlines, Indian Airlines and Jet Airways have popular FFPs. But there is little awareness on effective utilisation of airline loyalty programs. Rough estimates show that more than half the air miles generated are lost due to inadequate information, unfriendly redemption processes and travellers' preference to take the best flight, time-wise as well as price wise. "There exist trillions of unused frequent flyer miles worldwide. Either the person doesn't accumulate enough miles required for an award or the award inventory is capacity controlled and they can't redeem the miles for the dates and destinations they want," says Chris Lopinto, president & co-founder of expertflyer.com, a New York-based air travel information service firm.


Globally, airline FFPs are profit centres, that is, their revenues earned from sale of miles to partners outstrips the costs incurred in running the FFP and providing for redemption. Due to lower levels of awareness about loyalty programs in India, however, most FFPs here are cost centres. "For a better redemption rate, airlines need to be more informative and creative of tie-ups," feels Zahir Abbas, associate consultant—travel retail at Technopak Advisors, a business consultancy firm.


However, for the best possible utilisation, it's advisable for air travellers to consolidate the miles into a single account to avoid miles breakage and maximise chances of getting an award ticket. "Besides, one needs to be flexible with dates and check for award inventory often and as soon as possible after the flight is published," says Lopinto. This apart, one also needs to consider his/her travel pattern to understand what program is best suited.


There are frequent flyer miles on credit cards too. But critics say there are more pains than gains. Rajan Chhibba founder of Intrim Business Associates, a management consultancy firm, believes co-branded cards don't offer extra mileage, as they are perceived to. "The benefit is often equal to the effective cost one incurs. They are good for the sign-up bonuses, but then that's where it finishes. They carry a high annual fee and an exorbitant interest rate," he says. In India, credit card players such as Deutsche Bank and American Express offer such cards and provide benefits such as award miles remain valid for unlimited time period apart from bonus reward points. But then terms are demanding too. For instance, Deutsche Bank Miles & More Credit Card requires one to make at least one miles-related purchase every month to make sure award miles do not expire.


The next phase of air travel, experts believe, could see aviation players increase their tie-ups with other airlines for more miles earning and making each FFP move towards becoming a profit centre. "Globally the trend will be to improve the air redemptions success rate as there is a significant revenue that major airlines generate by sale of miles and consumer dissonance on redemption can hurt this revenue stream if corrective actions are not implemented," says Rahul Kucheria, head of the Jet Privilege FFP at Jet Airways. Jet's loyalty programme has over 17 lakh members globally and tie-ups with over 60 partners across airlines such as Lufthansa, Virgin, Qantas, Cathay Pacific, hotels, telecommunication, retail and other categories.


A research, in fact, shows that customers who redeem are more likely to continue their patronage and have a greater life time value. "Frequent flyer miles are the world's largest currency. To give the members maximum benefits for their accrued miles, we keep on revisiting our loyalty programme from time-to-time," says the Kingfisher Airlines spokesperson. To enable the family members to pool their miles in one family head account, Kingfisher Airlines FFP, King Club recently introduced the family club. "The idea has been to ensure that the infrequent travellers in a family can pool the miles into one main account to take advantage of our redemption options," he says.


According to Abbas of Technopak, the day is not far when there will a single loyalty program between all major airlines. "Loyalty programs are always a very strong method to keep loyal customers to the brand. With the advent of budget airlines, this has taken a hit. Travellers (specially frequent) are waiting for innovative collection and redemption avenues," he feels.


What Are Air Miles?

These are reward points one earns by travelling frequently on an airline or an alliance of airlines. Once accumulated in large numbers, one can redeem these points for a free ticket, gift vouchers or even hotel bookings.

How Do You Get Them?

You have to become a member of an airlines loyalty program to start collecting them. Once you do that, you can gain air miles by spending on air tickets, shopping at specific places, if linked to the program among others. For instance, a Mumbai/ Delhi to New York return flight on Jet Airways economy class can earn a member at least 14,600 JPMiles. These 14,600 JPMiles can get you a free return ticket on Mumbai-Goa route.

How Can You Best Use Them?

To make the best use of air miles, consolidate the miles in to a single account. This will make sure there's no miles breakage and enhance your chances of getting a award ticket.

 
 

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