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Abu Dhabi, UAESaturday 15 December 2018

Frequent flyer? How best to earn, save and spend air miles

Is it better to use your hard-earned points on flights, upgrades or shopping? We plot the best way forward for savvy travellers

Etihad plans to sell much of its cargo fleet. Courtesy Etihad Airways
Etihad plans to sell much of its cargo fleet. Courtesy Etihad Airways

Frequent flyer schemes have been around since the 1970s, with a fairly basic premise – keep customers coming back by rewarding them for their loyalty. They have become (considerably) more complicated over time, but the underlying premise remains the same: you earn points by flying with an airline, which you can later redeem for free or far cheaper flights.

Most airlines have some sort of frequent flyer scheme, although for those living in the UAE, the Emirates Skywards and Etihad Guest programmes are the most useful. But how do you get the best value from them? Well, that requires a bit of research and a sprinkling of maths.

Earning in the air

The short version is that you earn “miles” based on the distance you fly with the airline. This is subject to the type of ticket you’ve bought and the class you’re travelling. For example, a return to London from Dubai with Emirates would earn you 900 Skywards miles in the cheapest economy tickets, 6,000 in fully flexible economy or 11,400 in fully flexible business class. The equivalents with Etihad from Abu Dhabi are 1,704, 6,818 and 11,932 Etihad Guest miles.

Spending in the air

Those miles can basically be used as currency to pay for future flights, with the amount of miles required theoretically linked to how far you travel. In practice, the link is loose, as sale discounts, and the tax, fees and charges that need to be paid on top muddy the waters somewhat. However, searching on random dates three months ahead for that London route, it would cost 32,980 miles plus Dh1,690 with Etihad in economy, or 45,000 miles plus Dh1,870 with Emirates.

For business class flights, it would be 132,224 miles plus Dh1,790 with Etihad, or 90,000 plus Dh3,880 with Emirates.

Getting the best value for redemptions

Getting value from your miles is not really about how many miles a flight would cost – it’s about how much the same flight would cost in cash. Using the London example on the same dates, a return with Etihad would cost Dh2,780 in economy or Dh14,530 in business. With Emirates, it is Dh2,570 and Dh14,340. Do the sums, and that means you’re getting Dh0.033 and Dh0.096 per mile travelling in economy and business respectively with Etihad. Or Dh0.015 and Dh0.116 per mile with Emirates.

With that, we hit the near universal rule about frequent flyer schemes – you will almost always get much better value redeeming miles in higher classes. The same applies for using them to upgrade.

Other factors, notably the amount of competition on the route, come in to play as well. Cash fares are usually higher on less competitive routes, while redemption costs tend to stay around the same. So, you’re likely to get better value for your miles going to Lagos or Jakarta than London, but that’s not a cast iron certainty.

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Partner airlines

It’s not just Emirates and Etihad you can earn with, though – both have myriad airline partners. For Emirates, these include JetBlue, Qantas and Korean Air. For Etihad, they include American Airlines, Garuda and Airberlin.

On-flight earnings vary, albeit not greatly, by airline. But spending miles with these partner airlines can be a source of good value, as the redemption costs tend to be more rigid. For example, a one-way economy domestic flight in the United States with American Airlines will set you back 12,500 Etihad Guest miles, irrespective of route. To waste them on a short, well-served route such as New York to Boston, which costs about $65(Dh238), is obviously not worth it. But on longer routes with less competition such as New York to Memphis (sample price: $200), that starts to get interesting. And the same principles apply with other partner airlines.

What about tier status?

The other great complication is that miles aren’t the only benefits dished out for flying with an airline. You also get tier points, which stack up to give you higher membership status and extra goodies, such as lounge access, priority boarding and more miles every time you fly. This is based almost entirely on flights taken, and is less easy to manipulate than the regular miles, which can be gained elsewhere.

Earning on the ground

A major part of the labyrinthine complication of frequent flyer schemes is the extension beyond flights. It’s now possible to earn miles in all manner of places – mostly travel related, such as hotel chains and car rental agencies, but there are some bizarre, seemingly unrelated partners.

For example, you can get up to 20,000 Emirates Skywards miles by subscribing to the Wall Street Journal, or two Etihad Guest miles for every US dollar spent on glasses at Al Jaber Optical. The partner lists are somewhat buried in the airline website, but worth scouting out.

Claiming miles where available, but not buying things just to get the miles, is a sensible strategy.

Play your cards right?

By far the most lucrative source of miles on the ground, however, is credit cards. Etihad has deals with NBAD, ABID and ADCB, while Emirates works with Emirates Islamic, Citibank and Emirates NBD on co-branded cards. There are several options with each card provider, with the miles earned per dirham spent generally varying according to the annual fee.

For example, ADIB’s Etihad Classic Visa gives 0.75 miles for every four dirhams spent in the UAE, and has a Dh500 annual fee. The Platinum version gives 2.2 miles per four dirhams and a free companion flight voucher (essentially a two-for-one) after spending Dh150,000 a year. But the annual fee with that is Dh2,000. There are also great sign-up bonuses that can climb up to the proviso-laden 80,000 miles offered on the Emirates Islamic Skywards Infinite Credit Card. As long as the cards are paid off in full at the end of every month, they are an easy way of accumulating miles on everyday spending. But whether the higher annual fee is worth the trade-off for the higher earning ratio will largely depend on personal spending and travel habits.

What if I’ve only got a few miles?

It is possible to buy miles to top up. With Emirates, you can only buy 25,000 a year, and at a rate of US$40 (Dh0.147 each) per 1,000. Etihad allows the purchase of 100,000 miles a year, costing US$20 per 1,000 (Dh0.073 each). Whether that’s worth it, depends on how much value you’ll get in the redemption.

The alternative is to not bother spending the miles on flights at all. Both airlines have online shopping sites – Emirates High Street (emirateshighstreet.com) and Etihad Guest Reward Shop (rewards.etihadguest.com) which allow you to spend miles on duty free-ish items such as jewellery, electronics and cosmetics.

For example, a 9000mAh Xtorm TRIP Power Bank for charging mobile phones costs 10,000 miles on the Etihad site. It can be bought for around Dh295 elsewhere, so you’re getting around Dh0.03 per mile. Don’t expect too much more than that for other products – deals are generally done with suppliers at a set exchange rate. This is neither great nor terrible value – but it’s a good baseline if trying to assess what you should be getting for your miles. From there, prepare to dive into the geeky but potentially lucrative frequent flyer maze.