Understanding air miles …

Travel - understanding air miles and frequent-flyer programs ...


There’s nothing better than sinking into a plane seat knowing the flight comes without a price tag.

The orange juice is sweeter, the blanket softer, the movies more entertaining, and the journey turbulence-free when loyalty, savvy shopping, and smart decisions come together to grab a free flight or secure an upgrade to a cabin further forward in the aircraft.

But in this age of complicated airline loyalty schemes, devalued air miles, credit cards linked to carriers, and retailers granting points on purchases, what’s the best way to fly at no cost? And what should you never do?


What are frequent-flyer programs?

Phil Hoffmann Travel’s chief executive officer Peter Williams says frequent flyer programs are airline loyalty schemes rewarding customers for their business by granting points and status credits.

“These points can be redeemed for discount or free flights, used to gain upgrades to premium cabins, and the status credits can provide access to exclusive airport lounges around the world as well as upgrades in membership levels,” he says.

“The number of points accrued varies on flight details – departure and arrival locations, fare classes, the airline – and while some programs are free to join, others charge a nominal membership fee, however these airlines often run promotions with discounted rates.

“Travellers can maximise earning by linking their frequent-flyer program with certain credit cards to earn points from everyday spending as well as asking their travel agent to book with affiliated hotels or car rental companies.”

Any secrets to getting value from points?

Australian Business Traveller’s points guru Chris Chamberlin – who shrewdly used loyalty platforms to pay for his 2017 honeymoon including business-class seats for two on flights to London, Paris and Venice – says anyone using frequent flyer bonuses to secure toasters and kettles “is doing it wrong”.

“Buying physical objects with your points rarely unlocks even one cent of value for every point you’ve spent, and at a fraction of one cent each, it’s hardly worth collecting them,” he says.

“You get far better value by using points to actually fly, especially in business class rather than economy, and be flexible because you might not always be able to book the most direct or quickest flight using your points.

“We all know business-class fares can be incredibly expensive, typically between four and six times the price of one economy ticket depending on where you fly, yet for the most part, the number of points needed to travel at the pointy end is only twice that for an economy seat on the same flight.

“Crunching the numbers, that gives you anywhere from three to a whopping eight cents of value for every one point, making your balance worth up to 16 times as much when spent in the right way.”


Why do airlines have frequent-flyer programs?

Angus Kidman, travel expert at finder.com.au, says while frequent-flyer programs are a source of revenue for airlines – carriers make money selling points to other businesses – the main purpose is to inspire passenger loyalty.

“If you’re busy trying to earn points, you’re not going to look at other airlines,” he says.

“The best airline programs for most Aussies are Qantas or Virgin, because regular travellers are more likely to be making domestic flights than international ones, and you should be signing up to airlines you intend to use regularly.

“Virgin has a slightly longer points’ expiry, and notifies members via email at least 30 days before points expire, while with Qantas you have to actively check your statement for upcoming expiration dates.

“Both Virgin’s Velocity and Qantas’ Frequent Flyer are part of global alliances, so you’re able to score points travelling internationally – Qantas is part of oneworld, which is twice as big as the Virgin network – but if you make an annual trip to Thailand or Bali and usually fly with the same carrier, sign up to their program as well.’’

 How much do I need to spend to earn free flights?

Canstar finance expert Steve Mickenbecker says it’s not surprising that reward credit cards have found a permanent place in Australian wallets. Holiday-makers have come to love the promise of earning free getaways, but a recent rule change means it now costs considerably more to hop on an aircraft for nix.

“Last year the Reserve Bank rained on the holiday plans of Australian travellers by capping bank credit card interchange fees, and less income means banks cut back on rewards and scrapped some of the more generous cards,’’ Steve says.

“Canstar’s latest research shows flight rewards are now worth less to consumers. Before the changes, it would take on average $112,625 of spend to redeem a one-way flight to Los Angeles but now it’s almost $19,000 more or approximately $131,504 to secure the same flight.

“But there are still deals that make it up the runway and, for example, you only need to spend $60,914 on an average Canstar five-star card to redeem a one-way flight to LA, so be sure to choose the right account.

“And a word of warning, don’t apply for an expensive rewards card if you don’t repay your balance in full every month as the rewards won’t cover the higher interest charges.”


Should infrequent travellers join a frequent-flyer program?

The short answer is yes – especially when membership is free or an airline waives joining charges to attract new customers – and while regular travellers benefit most, even occasional jetsetters can secure freebies by collecting points on completed kilometres.

I have a family who are taking a winter escape to northern Queensland later this year on points accumulated from an around-the-world trip in 2016 – flights from Australia to the United States, across the Atlantic to Europe, then home via Asia.

“It’s definitely worth joining frequent flyer programs as they are now heavily linked to credit cards and also retail shopping loyalty schemes,” says Webjet country manager David Galt.

“The most successful earners are combining points from spending with points while flying – even if the flying is infrequent – and NAB Rewards members, for example, earn three times the points when shopping at webjet.com.au and can use their points to pay for their travel all while earning airline points.”

How do airlines allocate frequent-flyer seats?

Keith Mason, founder of pointhacks.com.au, says that while landing an “award seat” is the cheapest option for using points on a flight, the airlines limit fares that can be purchased with bonuses to ensure enough passengers are paying cash to make the service profitable.

“Using points for flights, especially in business class, is usually great value, but the availability challenge makes finding these seats tough,” he says.

“When it becomes particularly hard is when many travellers are competing for a few award seats during peak periods or on popular routes, and while it’s possible, you need to plan ahead and hope for a little luck.

“If organised, you can often make award bookings nearly a year in advance – this is one of the better times to start looking as you’re mostly one step ahead of everyone else – and the other time that opportunities come up is last minute as airlines look to fill empty cabins.

“Using points can often be hard but with a little planning around when and where you fly, plus when you book, you can reduce the cost of your travel in the long run.”

British Airways


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