Airline Reward Programs and Frequent Flyer Points
A frequent flyer program (FFP) is a loyalty program offered by many airlines. Typically, airline customers enrolled in the program accumulate frequent flyer miles (kilometers, points, segments) corresponding to the distance flown on that airline or its partners. There are other ways to accumulate miles. In recent years, more miles were awarded for using co-branded credit and debit cards than for air travel. Acquired miles can be redeemed for free air travel; for other goods or services; or for increased benefits, such as travel class upgrades, airport lounge access or priority bookings.
The first modern frequent flyer program was created at Texas International Airlines in 1979. But lacking the computer horsepower of its larger competitors, TI was overtaken by American's introduction of AAdvantage in May, 1981. During the early days, several other carriers experimented with reward programs, including Braniff International and Continental (OnePass).American's program was a modification of a never-realized concept from 1979 that would have given special fares to frequent customers. It was quickly followed later that year by programs from United (Mileage Plus) and Delta (SkyMiles), and in 1982 from British Airways (Executive Club).
Since then, frequent-flyer programs have grown enormously. As of January 2005, a total of 14 trillion frequent-flyer miles had been accumulated by people worldwide, which corresponds to a total value of 700 billion US dollars.
The primary method of obtaining points in a frequent flyer program until recent years was to fly with the associated airline. Most systems reward travelers with a specific number of points based on the distance traveled (such as 1 point per mile flown), although systems vary. Many discount airlines, rather than awarding points per mile, award points for flight segments in lieu of distance. In Europe, for example, a number of airlines offer a fixed number of points for domestic or intra-European flights regardless of the distance. The calculation method can become complicated, with additional points given for flying first or business class, and often fewer points given when flying on discounted tickets.
With the introduction of airline alliances and code-share flights, frequent flyer programs are often extended to allow benefits to be used across partner airlines.
Many programs also allow points to be obtained not just through flying, but by staying at participating hotels, or renting a vehicle from a participating company. Other methods include credit and debit cards that offer points for charges made to the card, and systems which allow earn miles by eating at participating restaurants and charging the meals to registered cards.
Programs differ on the expiration of points. Some expire after a fixed time, and others expire if the account is inactive for an extended period (for example, three years).
Many frequent flyer programs identify travelers who fly more than a few times per year by awarding them different status levels, which in turn give a number of benefits. Status levels vary from scheme to scheme, but benefits can include:
* Access to business and first class lounges with an economy ticket
* Access to other airlines' lounges
* Increased mileage accumulation (such as doubling or tripling)
* Reserving an unoccupied adjacent seat
* The ability to reserve specific seats, such as exit row seats with more leg room
* Free or discounted upgrades to a higher travel class
* Priority in waitlisting or flying standby
* Preference in not being bumped if a flight is oversold
* Priority of luggage (to be prioritized on transfer and to be displayed on the belt first)
* Ability to grant status to another person
* Eliminating of program's miles expiration rules
Some programs even permit elite members to reserve space on sold-out flights, giving members the ability of bumping regular passengers. In the US, member status is based on elite qualifying miles (EQM) or number of flight segments, not redeemable miles. Typically one elite qualifying mile is earned for each mile flown on a paid ticket, although there may be a percentage bonus for flying full-fare economy, business, or first class. In addition, the airline may offer opportunities to earn elite qualifying miles in non-flying ways, often in connection with their branded credit card. There are usually many more ways to earn redeemable miles (which can be used for free tickets and other benefits) without flying than ways to earn elite qualifying miles. Some airlines will recognise a customer's status with a competing airline, and grant them the same benefits.
Some airlines offer accelerated admission to their elite programs through special promotions, such as flying 10,000 miles (16,000 km) of non-discounted coach fares or 20,000 miles (32,000 km) of discounted fares within three months gains a higher tier membership normally reserved for passengers flying 50,000 miles per year.
Value of a mile
Travellers frequently debate how much accumulated miles are worth, something which is highly variable based on how they are redeemed. A typical ballpark figure is approximately 2 cents per mile based on discount (rather than full fare) economy class travel costs. However, most airlines have stringent capacity constraints on the number of "award" seats available, so some people argue that this ballpark figure is an overstatement. In this case, the value of a mile drops below a cent per mile. The airlines themselves value miles in their financial statements at less than one one-thousandth of a cent per mile.
In contrast, calculating the value of a mile based on full-fare business class travel costs can yield a figure several times higher, but only if the customer would personally be willing to pay the multiple thousands of dollars such tickets would cost otherwise. However, a person paying a full business fare will be able to change flights on short notice without extra cost; a person flying business class on a free award ticket may find that last minute changes result in no award seat availability with the result that a ticket must be bought.
Increasing limitations on the availability of seats for point redemption, increases in services fees that airlines charge for redemption, and limitations on the transferability of redeemed tickets together have caused the value of miles to customers to decrease with time.
Air New Zealand found a unique solution to this problem, by pegging their Airpoints scheme so one point (an "Airpoints Dollar") has the same value as one New Zealand dollar when purchasing. This approach has also been adopted by Canada's WestJet Airlines.
* Air Canada Aeroplan - Miles expire after 12 months of account inactivity or 7 years after they are earned, whichever occurs first.
* AirTran A+ Rewards - Credits expire 1 year after they are earned (2 years after earning with elite status or co-branded credit card).
* Alaska Airlines and Horizon Air Mileage Plan - Miles expire after 24 months of account inactivity.
* American AAdvantage - Miles expire after 18 months of account inactivity.
* Continental OnePass - Miles don't expire, however, accounts may be closed or miles forfeited after 18 months of account inactivity. Policy has not been enforced since 1992.
* Delta SkyMiles - Miles expire after 24 months of account inactivity.
* Frontier EarlyReturns - Miles expire after 24 months of account inactivity.
* Hawaiian HawaiianMiles - Miles expire after 18 months of account inactivity.
* JetBlue TrueBlue - Credits expire 12 months after last flight or co-branded credit card activity.
* Mexicana Frecuenta - Miles expire 18 months after last activity.
* Southwest Rapid Rewards - Credits expire 2 complete calendar years after they are earned.
* Spirit Airlines FREE SPIRIT - 2,000 miles must be earned in a six-month rolling period to prevent expiration.
* United Mileage Plus - Miles expire after 18 months of account inactivity.
* US Airways Dividend Miles - Miles expire after 18 months of account inactivity. Paying a fee will extend miles for another 18 months.
* Virgin America eleVAte - Miles expire after 18 months of account inactivity.
Frequent Flyer Miles Rewards and Points - Earn Discount Travel or Cash back
Airline rewards cards, also known as "miles cards" or "frequent flyer" cards, have become the most popular incentive based credit card rewards programs over the past decade.
The major players on this market are Citi, American Express, Chase Manhattan Bank, and Capital One. All four banks have a variety of different miles cards, whether they be airline specific, like the American Airlines AAdvantage MasterCard from Citi, or general airline cards such as the newly-introduced American Express Blue Sky Card.
Citi also features two different airline miles cards. The AAdvantage American Airlines Mastercard, an airline specific miles card; and the new Citi PremierPass, a general airline miles card. The AAdvantage Card is similar to other airline miles cards in the respect that it offers bonus miles after the first purchase, in this case 20,000. The APR is 17.99% on balance transfers/purchases and the card comes with an annual fee of $85. Consumers who elect to carry this card should try to pay their balance in full at the end of every month as the 17.99% APR can accumulate massive amounts of interest if the balance is too high.
With Airline Credit Cards, Frequent Flyer credit cards, and Travel Reward Credit Cards you can accumulate points for free flights, hotel stays, car rentals and other benefits. These cards let you save money in many different ways, With an airline credit card you accumulate points redeemable for free flights on major airlines, with a frequent flyer credit card, you earn miles that go into your frequent flyer account, and with travel rewards cards, you can earn points either towards free air travel or towards other benefits, such as hotel stays, cruises, car rentals, and much more.
These frequent flyer points are redeemable for airline, hotel, rental car, or cruise savings. Once a consumer is approved for the American Express Blue Sky Card, he or she is automatically enrolled in the World Class Cardmember Benefits Program, featuring travel accident insurance, a buyers assurance program, and return protection. the Blue Sky credit card is also non-specific to any particular airline, so travel is permitted on several major airlines.
Airline credit cards or airline miles credit cards earn cardholder's points or frequent flyer miles credits.Typically, the cardholder earns one point or mile for each dollar charged on the airline reward card. After building points from the dollar amount of card purchases over time, cardholders can redeem the points for free airline tickets and travel or upgrades from coach to first class.
The cards work similarly to how one might utilize frequent flyer miles on any airline. When you search and compare airlines credit card offers, be aware that rewards for all airline credit cards are based on predetermined point levels. So, make sure you find out how many points you'll need to accumulate in order to qualify for free air travel.
Capital One features the No Hassle Rewards Miles Card, an airline rewards card. Capital One boasts no blackout dates for travel. What they fail to mention is that this card comes with an introductory APR of 13.9%, both on balance transfers and purchases. They also imply that the competition, American Express and the others, promote cards that do have blackout dates for travel. This is simply not the case.
You can benefit from airline credit cards.Not only do airline credit cards make it easier to travel for business or for pleasure, but you can also earn great rewards at the same time. Rewards that you can use to make it even easier to travel.
American Express has just launched a new miles card, the American Express Blue Sky Credit Card. This card, in comparison to the No Hassle Card, comes with a 0% introductory APR for 6 months with a 12.24% APR thereafter. There are no blackout dates or restrictions for travel with the Blue Sky Card and you earn 1 point for every dollar you spend.
Also, be sure to know when points will expire on your card. If you don't use your mileage card points within a certain amount of time, be cautious. If your card is inactive for an extended period, your points can expire. Since the top card reward programs tend to be very costly for credit card companies, most miles card offers usually come with an annual fee. These cards also tend to have higher interest rates than other comparable airline cards.
Airline travel credit cards offer airline or hotel rewards. You earn frequent flyer miles or rewards points when you travel or when you spend. The frequent flyer miles or rewards points can be redeemed for airline discounts or free nights at participating hotels. If you are a frequent flyer or travel a lot, an airline or travel credit card could help save you money.
Citi's other miles card, the new Citi PremierPass, comes with a 0% introductory APR on balance transfers/purchases and a 13.49% APR thereafter. The PremierPass allows travel on any airline with no blackout dates. the consumer also has the opportunity to redeem points accumulated for gift certificates, merchandise, and even statement credits as part of instant enrollment into Citi's ThankYou Network.
Chase Manhattan Bank has reacted in response to general frequent flyer cards by launching their new Chase Value Miles Visa, a replacement for their older and very popular miles card, the Chase Travel Rewards Visa. This is basically a new and improved card to its relative featuring a 0% introductory APR on both balance transfers and purchases. After the first year, the APR is raised to a low 10.99%. The Chase Value Miles also has no blackout dates for travel and provides consumers with platinum benefits including travel insurance, travel assistance, emergency cash delivery, and lost card reporting. With this miles card you may also travel on any major U.S. airline.
There are so many choices out there for airline rewards cards which is why many consumers find difficulty in making their selections. Basically what it comes down to is how much flexibility does the consumer want with their card. Most general airline miles cards now come with no blackout dates for travel and no annual fees. However, many consumers are enticed by the initial frequent flyer bonus miles they will receive with airline specific miles cards. Everyone loves a free vacation, and both types of miles cards give the consumer an opportunity to earn one.
Their other popular airline miles card, the American Express Gold Delta Skymiles Card is airline specific to Delta. All travel is completed by Delta and its partners upon frequent flyer point redemption. This card does come with an introductory APR of 9.99% and 15.99% thereafter, but the consumer does receive 10,000 bonus Skymiles after their first purchase. There is no annual fee for the first year, the consumer can earn double miles for purchases on gas and groceries, the frequent flyer miles never expire, and they feature over 400 destinations for travel redemption. This is a great miles card for people who regularly travel on Delta.