Frequent-flier miles is a new currency that is proving easier to earn than to spend
on something really worthwhile, since free seats are seldom available on popular
routes at popular times. Frequent-flier programmes are probably the most successful marketing ideas of all time. Since American Airlines introduced Advantage 18 years ago, mileage counting has become an addiction with an estimated 150 million travellers. Nine out of 10 business travellers are now FFP members.

FFPs have been hugely influential in choosing an airline. More than three-quarters of all business travellers say that programme membership influences their choice of a carrier.

FFPs are under threat from all sides. Pressure is mounting from governments, which view FFPs as inimical to fair competition, especially in view of the concentration of major airlines into major alliances, such as STAR ALLIANCE or ONEWORLD.

Recently, in a landmark case in Canada, a court ruled that the income of two executives be reassessed to take account of free airline tickets they had received under FFP. If adopted, all round, this could seriously undermine the attraction of FFPs. Similarly Swedish travellers are now required to pay tax on FFP awards; employees must inform the company of any FFP award, and the company then informs the tax people. Germany has imposed a 2 per cent tax on FFP awards exceeding a value of DM 2,400 a year. Leading corporations are saying; frequent-flier awards should belong to the company, not the individual. Most airlines still refuse to give FFPs to corporations. But then Virgin Atlantic, Asian, Turkish Airlines and China Airlines have broken ranks and started giving FFPs to selected corporations, besides continuing with mileage to the individuals. Companies make out those FFPs, inflate fares and encourage employees to make unnecessary or circuitous trips to amass lucrative bonus points. No-frills airlines are campaigning against FFPs as being inherently corrupt and distorting the market. Air fares, they claim, could be reduced by at least 10 per cent if FFPs did not exist.

A major threat to FFPs is the airlines themselves. Some of them have started calling into question just how necessary is it to spend at least 3 per cent of the value of a ticket in funding FFPs when there is enormous pressure to cut costs, especially when corporations are doing more and more deals with airlines, such as route discounts or business-class upgrades for some executives. As the main travel decision moves more towards the corporation than the traveller, airlines are asking whether they still need to incentive individual travellers.

FFPs do involve a significant cost to airlines. Yet it is very unlikely for an airline to withdraw from the scheme unilaterally; FFPs are such a brilliant market tool. It’s more than brand loyalty; they offer an opportunity to build a direct relationship with travellers.

Airlines, however, are trying to reduce the cost of running FFP schemes. Airlines which now owe travellers as much as two trillion miles, are placing more and more restrictions on earning miles and award redemption, such as expiration dates, blackout periods, and ‘capacity control’, whereby only a few seats are available on each flight for award travel. Upgrades—one of the most sought-after benefits—get restricted to full-fare passengers.

Travellers themselves who have seen the value of their hard-earned mileage diminish substantially within the last couple of years have become somewhat frustrated, asking whether it is worthwhile. Try booking a seat six months in advance on your award miles. You may be horrified to find, none is available on that date.

No wonder, the new (sixth) edition of Randy Peterson’s Official Frequent Flyers Guidebook is welcome to mileage junkies. Six hundred pages of detailed information on more than 100 airlines, car rental, charge card and phone company programmes.

Curiously enough, by now more than 30 per cent of all FFP miles and points are earned through allied programmes, such as affinity credit cards, hotels and car rentals. Indeed, a lot of people using the affinity credit card earn the bulk of their mileage through card-spending than actual travelling.

All said and done, membership of FFPs remains popular, even when there is confusion among travellers about its true benefits. Besides miles, the perks of the programme—things like lounges, automatic upgrades, priority seat booking and extra care as rewards for the ‘very frequent flyers’—prove enticing.

You’ve spent so much money on airline tickets and management time piling up frequent-flier miles. You charged everything to your credit card to earn that one mile per dollar. You stayed in less-favoured hotels to earn points.

And now when the time has come to redeem those hard-won miles for a dream holiday, the airline has the cheek to tell you that the destination has been dropped from the programme. Or there’s a blackout on the dates you want to travel, or that while revenue earning seats are available, there are no seats left for frequent fliers.

So airlines often resort to blackouts for frequent-flier awards during major holidays, and on some routes during peak travel season. Others are coming hard on infrequent flyers—closing the account if you haven’t flown within the last 18 months. It is reckoned that out of 644 billion miles earned in 1998, only 280 billion were redeemed. Better plan your trip as far ahead as possible, as award seats fill quickly. Have several dates and times in mind when you contact for booking. Your best chance is to fly midweek. Consider buying a ticket and using your miles for an upgrade to a premium class with a firm reservation. Though upgrades can eat up a whole lot of mileage, they still remain the most practical way to trade mileage for comfort.