Skip to main content

A Traveller’s Guide - Air Miles

 

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.

 


Popular posts from this blog

Mutual Fund Review: Taurus Tax Shield

    Taurus Tax Shield has seen a turnaround in performance since 2007, but still remains a volatile offering… The fund has seen a turnaround in its performance since 2007 and has delivered impressively during market rallies since then. The portfolio is also more diversified. It contained its downfall to an average level in 2008 but is still one of the most volatile offerings in this category. Bold investors can look at this fund.   Strategy The fund manager invests across the market capitalisation and sectors. The selection of stocks is made on the basis of long-term business prospects and value creation. Fund Insight Launched in March 1996, the fund was a laggard with just two annual outperformances. Concentrated stock bets and high exposure to mid and small caps led to it being hit harder during market downturns. The number of stocks in the portfolio never exceeded 20 and it was not rare to see the top 5 holdings account for around 60 per cent of the portfolio. After b...

AXIS Long Term Equity Fund - The Best Tax Saver Fund for 2016

  AXIS Long Term Equity Fund - Invest Online   History:   The open ended mutual fund was launched on December 21 in the year 2009. It is benchmarked against BSE 200 and managed by the fund manager JINESH GOPANI. Initially the scheme was called as Axis tax saver fund but later it was renamed as Axis long term equity fund with effect from September 2, 2011. Nature of investment: As far as asset allocation is concerned, 97.52% of the stocks are equity and 0.02% is debt based. The primary focus of the fund is to invest in diversified equity stocks that have higher growth potential. Total asset size of the fund is in the tune of 4,996 CRORE as of June 30, 2015. Performance: The performance of the fund for one year, 3 years and 5 years are 23.6%, 29.9% and 19.1 respectively which are far greater than 6.4%, 14% and 5.6% benchmark figures. It has also preformed fairly well against SBI magnum Tax Gain (G) and HDFC tax saver (G). The growth comparison is enumerated below;                        ...

IDFC Classic Equity Fund

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)   IDFC Classic Equity Fund IDFC Classic Equity is a large-cap equity fund which currently has assets under management worth Rs. 158.52 crore. It was launched in August 2005. The fund is benchmarked against the BSE-200 Index. Performance YTD 1-Year 3-Year 5-Year Since Inception IDFC Classic Equity 0.93 26.61 6.30 1.01 11.65 BSE 200 1.52 17.31 6.00 1.99 12.98 All figures in % as on January 31, 2013; Returns above one-year in CAGR terms ...

Health insurance guide - Part I

Insurance, by definition, is morbid. What if I die suddenly? What if my home caught fire? What if I had to undergo expensive medical treatment? What if something that I thought happened only to others befell me? Insurers, who work with large samples, calculate the probability of such an event and, hence, the possibility of them having to pay out a sum of money to mitigate, to the extent possible, the effects of that disaster. However, the possibility of you undergoing some kind of expensive medical treatment during your lifetime is far more likely than you dying suddenly or your house burning down. Given that costs at private healthcare facilities, where you are most likely to land up, is high, and, doubling every four years 10 months or so, the rest of your money life could easily go out of whack if you had to incur such expenses. Just 12 per cent of India's population is covered with some sort of health insurance. Pared to the bone, for a comparatively small price, health insu...

10 year NSC launched, all set to give 8.7 per cent

Invest in Mutual Funds Online Download Mutual Fund Application Forms THE government introduced a 10-year National Savings Certificate ( NSC ), which will earn an interest rate of 8.7 per cent per annum. The notification for the launch of the new savings instrument, 10-year National Savings Certificate (IX-Issue), 2011, has been issued, an official statement said. The scheme will come into effect from December 1, it added. Investments in NSC will earn interest at the rate of 8.7 per cent compounded semi-annually, it said, adding that on an investment of Rs 100, the depositor will get Rs 234.35 on maturity of the NSC. There is no upper limit for investment in the certificate, it added. The new scheme will give better returns along with tax benefit to savers. At present, the maturity period of NSC is six years and it qualifies for tax relief for investment up to Rs 1,00,000 under Section 80C. The decision to raise the maturity period of NSC has been taken on the b...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now