In this story, Mint unravels the maze of airline loyalty programmes and strategies to earn free flight tickets.
Air miles are rewards that airways present whilst you fly with them. Some reward components have a monetary value, whereas others solely get you air miles.The ones with monetary value will be utilized as cash to make funds whereas reserving a flight ticket. For event, Spicejet has a scheme whereby one reward degree is worth 50 paise. Even the taxes on these tickets can be paid with these reward components.
Some airways present air miles. They adjust to some extent system and tickets are priced in components for these reserving the flight by way of air miles. To ensure that, each airline has a definite miles incomes cost that ranges from 3-8%.
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“Vistara’s air miles are often known as CV components they normally don’t carry any cash value. The airline has fixed a positive number of CV components all through routes and airline class and it’s unrelated to the ticket value of the similar flight on a particular day. For event, a Delhi-Goa financial system class ticket is fixed at 6,000 CV components and the prices won’t be dynamic. Air miles solely cowl the underside fare and the taxes should paid individually,” said Sumanta Mandal, founder, TechnoFino, a digital platform that offers personal finance advice.
How to earn your air miles
There are three ways to earn air miles: sign up with the loyalty programme of an airline, use co-branded credit cards that allows converting reward points accumulated with the card company, or bank through different types of spends to partner airlines.
Frequent flyer programmes: These do not require you to buy a credit card. You earn air miles each time you fly with a particular airline, using online banking to book tickets. “These are loyalty programmes that brands offer for transacting with them. The idea is that you spend frequently with a brand and get a reward in return for your loyalty,” said Kashif Ansari, assistant professor, Jindal School of Banking and Finance, O.P Jindal Global University. This chance is helpful for people who want to fly with select airways or those who do not want a financial institution card.
Low-cost airways in India each don’t have frequent flyer programmes or solely present one which has low incomes along with redeeming prices which do not revenue prospects quite a bit.
For event, among the many many low funds carriers, GoAir, which these days filed for insolvency, did not have a loyalty programme for its prospects. Indigo solely affords reward components by way of co-branded financial institution playing cards, whereas Spicejet’s reward prices are so low {{that a}} purchaser should take about 25 flights on a busy route like Delhi to Mumbai to earn enough components to earn one free flight (see graphic). Also, reward components in Spicejet’s loyalty programme, known as SpiceClub, embrace a one 12 months expiration. Besides, you’ll need to construct up a minimal 500 components initially to be even eligible to start using the components.
Credit card components: In a reward financial institution card, the components that you just earn are collected with the cardboard issuing agency or monetary establishment. Some of these taking part in playing cards imply you possibly can swap these reward components to the confederate airways which then get reworked into air miles.
“Typically the selection to remodel reward components into air miles is obtainable by premium and great premium financial institution playing cards. Currently, American Express, HDFC, Axis and Citibank are the one 4 avid gamers that offer reward financial institution playing cards with a swap chance,” said Ansari. “This is a faster way to accumulate air miles compared to, say, just enrolling in a loyalty programme.”
This chance is helpful to extreme income earners who use premium financial institution playing cards repeatedly for buying, and spends on groceries, consuming, movement footage and lots of others. Rewards earned from gasoline, insurance coverage protection premiums, utilities are normally not allowed to be reworked into air miles. Reward cost on these taking part in playing cards is often extreme, going as a lot as 12%. However, the swap ratio on these taking part in playing cards is simply not on a regular basis 1:1 (see graphic), which means that in some situations it is doable you will lose rewards in conversion.
Co-branded taking part in playing cards: Airlines confederate with banks or financial institution card companies to provide financial institution playing cards that offer rewards on spends inside the kind of air miles and free air tickets. For event, Indigo affords co-branded financial institution playing cards with Kotak monetary establishment beneath its 6E rewards programme whereby the rewards incomes cost is 3-6% and one air mile earned by way of them is identical as ₹1.
Co-branded taking part in playing cards come bundled with additional bonuses, equal to free flight tickets or 5,000-20,000 reward components as changing into a member of bonus.
“Co-branded journey taking part in playing cards may enable you accumulate accelerated reward components for individuals who are more likely to fly a particular airline or information by way of a particular platform,” said Adhil Shetty, CEO, BankBazaar.com.
However, Ansari said the downside with co-branded cards is that you’re restricted to one particular airline, unlike with a rewards card.
Redeeming your air miles
In the case of airlines that value their reward points in rupees, the points can be used to buy tickets and services. Think of these points as cashback offers. The calculation of reward points is simple and transparent. For instance, for a Spicejet ticket priced at ₹5,000, you need 10,000 points (1 point = 50 paise).
Airlines that offer award flights (flight tickets priced in reward points) are saddled with complicated terms. For one, limited seats are available under this option. “Vistara allocates only four economy and two business class seats to air miles in each flight and they are given on a first-come, first- serve basis. This means, one has to plan in advance to buy a ticket through air miles,” said Mandal. Second, airways may change their miles requirements for a trip spot over time, which means that it’d grow to be more durable to redeem your air miles for the rewards you want, he added.
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