Mileage Millionaires

Deep Singhania, Director, Business Development, Middle East and Far East Asia, Tata Infotech Limited, is a frequent flier who flies once every month. His travel region extends from Singapore on the east up to Kuwait on the western side. He flies with most of the airline based on their frequency and the schedule of his meetings. Though this constrains him to distribute the points over various airlines, when asked whether frequent fleet point come into consideration when he schedules a trip, Singhania’s answer is an unambiguous yes. ‘‘It plays a role up to 60 per cent of my decision,’’ he says.

Singhania is not alone.

I M Shaikh, General Manager-Customer Support, Micro World Software Services Pvt Ltd is somebody who does not fly very frequently nowadays. But, he says, ‘‘during the peak of my career I was an avid tracker of my frequent flier points. It came into consideration when I had to schedule a flight.’’

Likewise for Indage Group Director Mr Vikrant Chougule who says, ‘‘It features in my schedule when I fly in the domestic sector.’’

With the world’s corporate community completely in its thrall, it was just a matter of time before Frequent Flying Miles (FFMs) started becoming another form of currency.

Presently, in the West, we have FFMs which are bought, sold, bartered, shared and even collected for the sake of collection (like stamps). At least 100 million people in the world belong to a frequent flier programme. US Airways has launched a deal where, for 10 million miles, you can buy a seat on the first private spacecraft to take passengers into space, scheduled for 2004. In fact, you do not even have to fly to earn frequent flier miles.

A report in The Economist, a UK-based magazine, says: ‘‘Almost 50 per cent of miles are earned without even leaving the ground. The biggest earners are credit-card spending and telephone calls, but car rental, hotels, share-trading or refinancing a mortgage all offer extra opportunities to notch up your miles. In America you can even get miles on your income tax payments, if you pay by credit card. The world’s top frequent flier, reputedly a publishing executive who charge his firm’s postage bill to his own credit card has racked up 25 million miles, enough to fly London to Sydney return 250 times. Free tickets purchased with frequent-flier miles account for an average of 8 per cent of airline’s revenue passenger miles.’’

The big impetus to mileage-gathering has been the Internet. Making stock trades, filing out surveys or buying products online is enough to add to your account. Webflyer.com, a site catering to frequent fliers, estimates that there are more than 15,000 mileage-making opportunities, most of which can be collected by remaining on firm ground.

What is the secret of such phenomenal growth? Man’s fascination with anything which comes free, say Shaikh of Microworld. ‘‘Just better customer service was never enough. It will not develop a strong loyalty base in comparison with frequent flier points. The airline with the maximum freebies will have a strong customer base. It is like bribing someone with a different name, say frequent flier flier points,’’ he says.

The conclusion to this story should have been that as long as there is competition, the miles will keep on piling up. Unfortunately, that is only partly true. A crisis is in the offing for frequent fliers — all the miles that they accrue may just go waste.

Over the past five years, the number of miles awarded by airlines to its frequent fliers has doubled but miles redeemed have increased by only one-third.

In 2001, only one-fourth of the miles earned were redeemed. By the end of 2001, the ability of airlines was almost an astounding 8 million miles. At the current rate of redemption, it will take 23 years to clear the liability even if no new ones are issued.

Ordinarily this should have been a source of worry to airlines. But they are not worried since the fine print says that the membership of the frequent flier programme may be yours but the airline owns it. Some of them even explicitly state that the miles and points do not represent the owner’s property. Airlines can therefore limit their free seats. But for the fliers themselves, the number of seats available are being chased by too many miles.

Post-September 11, there was a huge rise in the number of empty seats making it easy to get a free flight. But with travel returning to normal, it will be increasingly difficult to secure free seats or upgrade on flights using frequent flier miles.

Chougule is bang on target when he says ‘‘people have logged on so many miles that airlines cannot have so many seats to encash all of it.’’

The wise thing to do is to start using the miles you have accumulated.

Courtesy: Express Business Traveller