Frequent flyers earn added benefit of air miles

On using credit cards the cardholder get discounts, loyalty cards and free tickets. But who fly frequently get more benefits besides those given on other credit cards. They get some interesting offers from their credit card companies, including co-branded airline cards, zero percent interest on ticket repayments and even free tickets.

Ramesh Iyer booked air tickets for his daughter who was going to UK for education and his wife who wanted to spend time with her, using his co-branded Standard Chartered Emirates’ credit card. On this he got a deal- he paid only Rs 6,000 (mainly taxes) for his wife’s return fare.

Iyer credit card gets him earn Emirates Airlines’ loyalty program, Skywards, in this program members have to pay an upfront charge of Rs 10,000, which allows them up to 25,000 redeemable bonus air miles. Further, on every Rs 150 spent through the card, there is an additional four air miles.

Suppose the upfront fee is Rs 10,000 and Rs 6,000 a tax, Iyer’s cost works out to be Rs 16,000. It is quite cheap in comparison to Rs 40,000 he would have paid otherwise. Seeing the cost advantage, Iyer decided to renew his membership, as he will travel to UK very often.

Sandeep Bhalla, business-head, credit payment products, Citibank India said, amongst the credit card holders air travel is the top-spend category. Thus, card companies concentrate more on these.

There are co-branded cards which are launched in tie-up with companies and airlines. Recently, ICICI Bank launched a co-branded card with Kingfisher Airlines, namely ICICI Bank Kingfisher Airlines MasterCard Credit Card. These cards link customers to the airline’s frequent-flyer program or its loyalty club. The club such as Jet Privilege and King Club give benefits like discounts, upgraded vouchers and access to travel-related privileged services at airports and hotels. The retail transactions can also be made from these cards.

If card issuer has a tie-up with specific airline then redemption of air miles can be restricted as the scheme is available for that airline only.

Arvind Hali, head (retail assets and credit cards), Dhanlaxmi Bank, says, “Several operational issues may arise if there are more than three partners in a tie-up. But airlines are exploring ways to allow customers the privileges on their extended network”. Soon bank will be tie-up with domestic airline.

However, most banks prefer to be airline independent. Deutsche Bank World Miles Credit Card can be used across all airlines worldwide the latest is Citibank PremierMiles Credit Card on which customers can earn air miles across 50 domestic and international airlines.

On such cards most banks charge fees ranging from Rs 5,000 annually (Citibank PremierMiles Credit Card) to Rs 25,000 for a lifetime (American Express Kingfisher First Platinum Card).

So, if you are frequent flyers then only opt for these cards. Most card issuers say it is wise to redeem air miles of international travel rather than domestic travel as customers get more benefits on international travel.

On airline cards customers get to convert the reward points into air miles but the conversion can cost a high number of reward points. For instance, SBI cardholder require to earn 4,000, 6,000 and 8,000 reward points get just 2,000 air miles to be redeemed against Indian Airlines, Kingfisher Airlines and Jet Airways, respectively.

Moreover, to get 2,000 air miles to buy a ticket, you require earning minimum of 4,000 air miles to buy a ticket. For instance, to get a Mumbai-Pune Jet Airways ticket for which you require 4,000 air miles you need to earn 16,000 rewards points if you are an SBI cardholder.

This means spending more cash. For instance if you want to avail 2,000 Citibank PremierMiles, you will have to spend Rs 80,000 on non-airline purchases (2.5 miles for every Rs 100). For airline-related expenses, spending 20,000 will get you 2,000 air miles (10 miles a Rs 100).

There are terms and conditions for redemption of reward points. Reward points of a few cards can lapse, if not redeem in a particular time period, making it difficult to accumulate enough points for conversion. On some there is restricting redemption on certain purchases like fuel or buying tickets of low-cost airlines. On others, there is black-out period, when travel is restricted, or period within which the air miles have to be redeemed.