How to Find Air-Mile Mega Deals During Covid-19 And Other Travel Tips

The coronavirus pandemic has left nearly a third of the world’s commercial jets grounded, but air-miles gurus like Ajay Awtaney, founder of India’s biggest frequent-flyer website, say this may be the best time for loyalty members to spend or rack up their points.

“Don’t panic! The opportunity to travel has declined, but earning of miles hasn’t,” said Awtaney, who set up LiveFromALounge in 2011. “Airlines are pushing out bigger incentives and people should use this opportunity because miles haven’t lost value.”

Even with people stuck at home, carriers have been pumping out offers to collect miles more cheaply or redeem them at steep discounts. British Airways just had a promotion offering flights for 50% of the miles usually required. Many have extended the validity of elite member status, lowered qualifying requirements to move up a tier or done away with points expiry as countries restrict entry or make travel less appealing with mandatory quarantines.

The reason: airlines desperately need money to survive the coronavirus crisis and loyalty programs are a major source of revenue, so they are making fresh overtures to their members and trying to bring new ones on board.

While the details differ from airline to airline, the programs typically revolve around a lucrative trade in points. Plans generate revenue by selling points to credit-card operators, hotels or shops. Frequent flyers collect them on purchases, and use them to buy flights or other goods. Airlines make a profit because they sell the points for more than it costs to redeem them.

These programs have become a vital crutch for carriers so starved of funds they’re converting grounded jets into restaurants, selling drinks trolleys and putting on sightseeing flights to nowhere. The very best plans have armies of followers itching for reward flights and upgrades, and they can generate hundreds of millions of dollars a year for airlines.

In this unprecedented industry crisis, British Airways’ owner IAG SA still managed to land almost $1 billion by selling points to American Express Co., while others including Delta Air Lines Inc. and United Airlines Holdings Inc. laid down their programs as security against billions of dollars of loans and bonds.

Some airlines are making more income from loyalty than flying, a handy lifeline when global air travel has been sliced in half. Qantas Airways Ltd.’s membership division was the airline’s biggest source of earnings in the year ended June. The Australian carrier expects the unit to make as much as A$600 million ($430 million) in profit by June 2024, almost double the current figure.

“Modern full-service carriers are data-driven companies based around loyalty programs that happen to fly around some planes,” said Rico Merkert, professor of transport and supply-chain management at the University of Sydney’s business school.

On the hunt for a deal? Here are some of the most eye-catching offers out there:

Singapore Airlines Ltd., Cathay Pacific Airways Ltd., Qantas and the major U.S. carriers are among the dozen or so airlines with the most valuable air-miles programs, thanks to their strong brands and links with credit cards, according to OAG Aviation Worldwide.

“The loyalty model remains robust,” said Mayur Patel, OAG’s regional sales director for Japan and Asia Pacific. “The more important, well-structured ones will always do a job and we will see them being more proactive.”

Frequent fliers are getting swamped with emails pedaling heavily discounted reward flights, hotel stays, consumer goods and wine. The goal is to ensure the accumulation of points remains worthwhile even when travel currently isn’t.

“Winning the recovery is bringing new customers to air travel and graduating them to higher tiers of loyalty,” American Airlines Group Inc. Chief Revenue Officer Vasu Raja said at a conference last month.

One challenge for carriers is that points can become a liability on the balance sheet when revenue from issuing them isn’t recognized until rewards are redeemed or expire, OAG’s Patel said. That aspect is encouraging airlines to offer more deals to clear the backlog, especially with so many flying at reduced capacity.

Subscribe to our YouTube channel

QUICKTAKE ON SOCIAL:

Follow QuickTake on Twitter: twitter.com/quicktake

Like QuickTake on Facebook: facebook.com/quicktake

Follow QuickTake on Instagram: instagram.com/quicktake

Subscribe to our newsletter

Email us at quicktakenews@gmail.com

QuickTake by Bloomberg is a global news network delivering up-to-the-minute analysis on the biggest news, trends and ideas for a new generation of leaders.