In this story, Mint unravels the maze of airline loyalty programmes and ways to earn free flight tickets.

Air miles are rewards that airlines offer when you fly with them. Some reward points have a monetary value, while others only get you air miles.The ones with monetary value can be used as cash to make payments while booking a flight ticket. For instance, Spicejet has a scheme wherein one reward point is worth 50 paise. Even the taxes on these tickets can be paid with these reward points.

Some airlines offer air miles. They follow a point system and tickets are priced in points for those booking the flight through air miles. To be sure, each airline has a different miles earning rate that ranges from 3-8%.

“Vistara’s air miles are called CV points and they don’t carry any cash value. The airline has fixed a certain number of CV points across routes and airline class and it’s unrelated to the ticket price of the same flight on a particular day. For instance, a Delhi-Goa economy class ticket is fixed at 6,000 CV points and the prices are not dynamic. Air miles only cover the base fare and the taxes need to paid separately,” 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 option is beneficial for those who prefer to fly with select airlines or those who do not want a credit card.

Low-cost airlines in India either don’t have frequent flyer programmes or only offer one that has low earning as well as redeeming rates which do not benefit customers much.

For instance, among the low budget carriers, GoAir, which recently filed for insolvency, did not have a loyalty programme for its customers. Indigo only offers reward points through co-branded credit cards, whereas Spicejet’s reward rates are so low that a customer needs to take about 25 flights on a busy route like Delhi to Mumbai to earn enough points to earn one free flight (see graphic). Also, reward points in Spicejet’s loyalty programme, known as SpiceClub, come with a one year expiration. Besides, you would need to accumulate a minimum 500 points initially to be even eligible to start using the points.

Credit card points: In a reward credit card, the points that you earn are accumulated with the card issuing company or bank. Some of these cards allow you to transfer these reward points to the partner airlines which then get converted into air miles.

“Typically the option to convert reward points into air miles is offered by premium and super premium credit cards. Currently, American Express, HDFC, Axis and Citibank are the only four players that offer reward credit cards with a transfer option,” said Ansari. “This is a faster way to accumulate air miles compared to, say, just enrolling in a loyalty programme.”

This option is beneficial to high income earners who use premium credit cards regularly for shopping, and spends on groceries, dining, movies etc. Rewards earned from fuel, insurance premiums, utilities are generally not allowed to be converted into air miles. Reward rate on these cards is usually high, going up to 12%. However, the transfer ratio on these cards is not always 1:1 (see graphic), which means that in some cases you may lose rewards in conversion.

Co-branded cards: Airlines partner with banks or credit card companies to offer credit cards that offer rewards on spends in the form of air miles and free air tickets. For instance, Indigo offers co-branded credit cards with Kotak bank under its 6E rewards programme in which the rewards earning rate is 3-6% and one air mile earned through them is equal to ₹1.

Co-branded cards come bundled with additional bonuses, such as free flight tickets or 5,000-20,000 reward points as joining bonus.

“Co-branded travel cards can help you accumulate accelerated reward points if you tend to fly a particular airline or book via 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, airlines could change their miles requirements for a destination over time, which means that it may become more challenging to redeem your air miles for the rewards you want, he added.