Frequent flyer program
Encyclopedia
A frequent flyer program (FFP) is a loyalty program
Loyalty program
Loyalty programs are structured marketing efforts that reward, and therefore encourage, loyal buying behavior — behavior which is potentially beneficial to the firm....

 offered by many airlines. Typically, airline customers enrolled in the program accumulate frequent flyer miles (kilometers, points, segments) corresponding to the distance flown on that airline or its partners. There are other ways to accumulate miles. In recent years, more miles were awarded for using co-branded credit and debit cards than for air travel. Acquired miles can be redeemed for free air travel; for other goods or services; or for increased benefits, such as travel class upgrades, airport lounge access or priority bookings.

History

The first modern frequent flyer program was created at Texas International Airlines
Texas International Airlines
Texas International Airlines was a United States airline, known from 1944 until 1947 as Aviation Enterprises, until 1969 as Trans-Texas Airways, and as Texas International Airlines until 1982, when it merged with Continental Airlines. It was headquartered near William P...

 in 1979. But lacking the computer resources of its larger competitors, TI was overtaken by American
American Airlines
American Airlines, Inc. is the world's fourth-largest airline in passenger miles transported and operating revenues. American Airlines is a subsidiary of the AMR Corporation and is headquartered in Fort Worth, Texas adjacent to its largest hub at Dallas/Fort Worth International Airport...

's introduction of AAdvantage
AAdvantage
AAdvantage is the frequent flyer program of American Airlines. Launched May 1, 1981, it was the second such loyalty program in the world , and remains the largest with more than 67 million members as of October 2011.Miles accumulated in the program allow members to redeem tickets, upgrade service...

 in May 1981. During the early days, several other carriers experimented with reward programs, including Braniff International and Continental
Continental Airlines
Continental Airlines was a major American airline now merged with United Airlines. On May 3, 2010, Continental Airlines, Inc. and UAL, Inc. announced a merger via a stock swap, and on October 1, 2010, the merger closed and UAL changed its name to United Continental Holdings, Inc...

 (OnePass). American's program was a modification of a never-realized concept from 1979 that would have given special fares to frequent customers. It was quickly followed later that year by programs from United
United Airlines
United Air Lines, Inc., is the world's largest airline with 86,852 employees United Air Lines, Inc., is the world's largest airline with 86,852 employees United Air Lines, Inc., is the world's largest airline with 86,852 employees (which includes the entire holding company United Continental...

 (Mileage Plus) and Delta
Delta Air Lines
Delta Air Lines, Inc. is a major airline based in the United States and headquartered in Atlanta, Georgia. The airline operates an extensive domestic and international network serving all continents except Antarctica. Delta and its subsidiaries operate over 4,000 flights every day...

 (SkyMiles
SkyMiles
SkyMiles is the loyalty program of Delta Air Lines that offers rewards to passengers travelling on certain types of tickets. Created in 1981 as the "Delta Air Lines Frequent Flyer Program"; its name was changed to SkyMiles in 1995. When the frequent flyer program was first established in 1981, new...

), and in 1982 from British Airways
British Airways
British Airways is the flag carrier airline of the United Kingdom, based in Waterside, near its main hub at London Heathrow Airport. British Airways is the largest airline in the UK based on fleet size, international flights and international destinations...

 (Executive Club).

Since then, frequent-flyer programs have grown enormously. As of January 2005, a total of 14 trillion frequent-flyer miles had been accumulated by people worldwide, which corresponds to a total value of 700 billion US dollars.

Miles accrual: flying

The primary method of obtaining points in a frequent flyer program until recent years was to fly with the associated airline. Most systems reward travelers with a specific number of points based on the distance traveled (such as 1 point per mile flown), although systems vary. Many discount airlines, rather than awarding points per mile, award points for flight segments in lieu of distance. In Europe, for example, a number of airlines offer a fixed number of points for domestic or intra-European flights regardless of the distance (but varying according to class of travel). With the introduction of airline alliance
Airline alliance
An airline alliance is an agreement between two or more airlines to cooperate on a substantial level. The three largest passenger alliances are the Star Alliance, SkyTeam and Oneworld. Alliances also form between cargo airlines, such as that of WOW Alliance, SkyTeam Cargo and ANA/UPS Alliance...

s and code-share flights
Code sharing
A codeshare agreement, sometimes simply codeshare, is an aviation business arrangement where two or more airlines share the same flight. A seat can be purchased on one airline but is actually operated by a cooperating airline under a different flight number or code...

, frequent flyer programs are often extended to allow benefits to be used across partner airlines.

The calculation method can become complicated, with additional points awarded as a 'cabin bonus' (usually as a percentage multiplier over the standard economy-class milage) for flying first or business class, and often fewer or zero points given when flying on many economy tickets sold through travel agents, online vendors, or the airlines' own web sites. Additional bonus points are sometimes granted after members reach specific levels of flying activity.

Programs differ on the expiration of points. Some expire after a fixed time, and others expire if the account is inactive for an extended period (for example, three years).

Miles accrual: partnerships and promotions

Many programs also allow points to be obtained not only by flying but by favoring airline 'partners' on the ground. This includes staying at participating hotels, or renting a vehicle from a participating company, or shopping at a particular department store. Other methods include credit
Credit card
A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services...

 and debit
Debit card
A debit card is a plastic card that provides the cardholder electronic access to his or her bank account/s at a financial institution...

 cards that offer points for charges made to the card, and systems which allow earn miles by eating at participating restaurants and charging the meals to registered cards.

Using credit
Credit card
A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services...

 and debit
Debit card
A debit card is a plastic card that provides the cardholder electronic access to his or her bank account/s at a financial institution...

 cards to earn points, as well as taking advantage of special promotional offers, can allow some people to earn an exceptionally high frequent flyer points with relatively minimal outlay.

Customer status

Many frequent flyer programs identify travelers who fly more than a few times per year by awarding them different status levels, which in turn give a number of benefits. Status levels vary from scheme to scheme, but benefits can include:
  • Access to business and first class lounges with an economy ticket
  • Access to other airlines' lounges
  • Increased mileage
    Mileage
    -Motor Vehicles:* Fuel economy in automobiles * Distance travelled as measured by an odometer...

     accumulation (such as doubling or tripling)
  • Reserving an unoccupied adjacent seat
    Airline seat
    An airline seat is a chair on an airliner in which passengers are accommodated for the duration of the journey. Such seats are usually arranged in rows running across the airplane's fuselage...

  • The ability to reserve specific seats, such as exit row seats with more leg room
  • Free or discounted upgrades to a higher travel class
  • Priority in waitlisting or flying standby
  • Preference in not being bumped if a flight is oversold
  • Priority of luggage (to be prioritized on transfer and to be displayed on the belt first)
  • Waived or reduced fees (e.g. baggage fees, service charges)
  • Ability to grant status to another person
  • Eliminating of program's miles expiration rules


Some programs even permit elite members to reserve space on sold-out flights, giving members the ability of bumping regular passengers. In the US, member status is based on elite qualifying miles (EQM) or number of flight segments, not redeemable miles. Typically one elite qualifying mile is earned for each mile flown on a paid ticket, although there may be a percentage bonus for flying full-fare economy, business, or first class. In addition, the airline may offer opportunities to earn elite qualifying miles in non-flying ways, often in connection with their branded credit card. There are usually many more ways to earn redeemable miles (which can be used for free tickets and other benefits) without flying than ways to earn elite qualifying miles. Some airlines will recognise a customer's status with a competing airline, and grant them the same benefits.

Some airlines offer accelerated admission to their elite programs through special promotions, such as flying 10000 miles (16,093.4 km) of non-discounted coach fares or 20000 miles (32,186.8 km) of discounted fares within three months gains a higher tier membership normally reserved for passengers flying 50,000 miles per year.

There is anecdotal evidence of flyers having frequent-flyer privileges taken away for undertaking booking ploys
Airline booking ploys
Airline booking ploys are tactics used by travelers in commercial aviation to lower the costs of flying to a desired destination. These tactics work around the airline's fare system...

.

Value of a mile

Travellers frequently debate how much accumulated miles are worth, something which is highly variable based on how they are redeemed. A typical ballpark figure is approximately 2 cents per mile based on discount (rather than full fare) economy class travel costs. However, most airlines have stringent capacity constraints on the number of "award" seats available, so some people argue that this ballpark figure is an overstatement. In this case, the value of a mile drops below a cent per mile. The airlines themselves value miles in their financial statements at less than one one-thousandth of a cent per mile.

In contrast, calculating the value of a mile based on full-fare business class travel costs can yield a figure several times higher, but only if the customer would personally be willing to pay the multiple thousands of dollars such tickets would cost otherwise. However, a person paying a full business fare will be able to change flights on short notice without extra cost; a person flying business class on a free award ticket may find that last minute changes result in no award seat availability with the result that a ticket must be bought.

Air New Zealand
Air New Zealand
Air New Zealand Limited is the national airline and flag carrier of New Zealand. Based in Auckland, New Zealand, the airline operates scheduled passenger flights to 26 domestic destinations and 24 international destinations in 15 countries across Asia, Europe, North America and Oceania, and is...

 found a unique solution to this problem, by pegging their Airpoints scheme so one point (an "Airpoints Dollar") has the same value as one New Zealand dollar
New Zealand dollar
The New Zealand dollar is the currency of New Zealand. It also circulates in the Cook Islands , Niue, Tokelau, and the Pitcairn Islands. It is divided into 100 cents....

 when purchasing. This approach has also been adopted by Canada's WestJet Airlines.

Bankruptcy

All airlines include provisos in their program agreements reserving the right to modify or eliminate them on relatively short notice. But since miles are a strong customer incentive, troubled airlines avoid their elimination in bankruptcy
Bankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....

 proceedings, and indeed may expand them or make them more generous to elite members and high fare passengers in order to win sales.

Historically, the record is mixed. U.S. airlines have usually honored miles held in the accounts of acquired airlines. For instance American Airlines converted members of TWA
Trans World Airlines
Trans World Airlines was an American airline that existed from 1925 until it was bought out by and merged with American Airlines in 2001. It was a major domestic airline in the United States and the main U.S.-based competitor of Pan American World Airways on intercontinental routes from 1946...

's "Aviators" program to its own, as did Air Canada
Air Canada
Air Canada is the flag carrier and largest airline of Canada. The airline, founded in 1936, provides scheduled and charter air transport for passengers and cargo to 178 destinations worldwide. It is the world's tenth largest passenger airline by number of destinations, and the airline is a...

 for Canadian Airlines
Canadian Airlines
Canadian Airlines International Ltd. was a Canadian airline that operated from 1987 until 2001. The airline was Canada's second largest airline after Air Canada, and carried more than 11.9 million passengers to over 160 destinations in 17 countries on five continents at its height in 1996...

' "Canadian Plus" program members. Sometimes, miles were honored by a close partner; Continental Airlines
Continental Airlines
Continental Airlines was a major American airline now merged with United Airlines. On May 3, 2010, Continental Airlines, Inc. and UAL, Inc. announced a merger via a stock swap, and on October 1, 2010, the merger closed and UAL changed its name to United Continental Holdings, Inc...

 assumed Eastern Air Lines
Eastern Air Lines
Eastern Air Lines was a major United States airline that existed from 1926 to 1991. Before its dissolution it was headquartered at Miami International Airport in unincorporated Miami-Dade County, Florida.-History:...

' program when it failed, as did Delta of Pan Am
Pan American World Airways
Pan American World Airways, commonly known as Pan Am, was the principal and largest international air carrier in the United States from 1927 until its collapse on December 4, 1991...

's. Bankrupt Swissair
Swissair
Swissair AG was the former national airline of Switzerland.It was formed from a merger between Balair and Ad Astra Aero , in 1931...

 miles were transferred to Swiss International Air Lines
Swiss International Air Lines
Swiss International Air Lines AG is the principal airline of Switzerland operating scheduled services in Europe and to North America, South America, Africa and Asia. Its main hub is Zurich Airport...

 TravelClub who were transferred to Lufthansa
Lufthansa
Deutsche Lufthansa AG is the flag carrier of Germany and the largest airline in Europe in terms of overall passengers carried. The name of the company is derived from Luft , and Hansa .The airline is the world's fourth-largest airline in terms of overall passengers carried, operating...

's Miles & More
Miles & More
Miles & More is the largest traveler loyalty program in Europe with 20 million members as of February 2011. It offers rewards to passengers of the Star Alliance travelling on certain types of tickets...

 after the acquisition of the Swiss carrier.

Members are at greatest risk of losing their miles when an airline liquidates. All miles and privileges were lost, without recognition from any other carrier, as in the cases of Midway
Midway Airlines
Midway Airlines was the name of two different, defunct airlines:*Midway Airlines , airline based in Chicago, Illinois and operating out of Chicago Midway International Airport between 1976 and 1991...

, Braniff
Braniff (1983-1990)
Braniff Inc. was an American airline, originally headquartered in Dallas, Texas and later headquartered in Orlando, Florida. It was partially formed from the assets of Braniff International Airways.-History:...

, and Ansett Australia
Ansett Australia
Ansett Australia, Ansett, Ansett Airlines of Australia, or ANSETT-ANA as it was commonly known in earlier years, was a major Australian airline group, based in Melbourne. The airlines flew domestically within Australia and to destinations in Asia during its operation in 1996...

.

Accounting issues

Business travelers typically accrue the valuable points in their own names, rather than the names of the companies that paid for the travel. This has raised concerns that the company is providing a tax
Tax
To tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...

-free benefit (point-based awards) to employees, or that employees have misappropriated value that belongs to the company, or even that the rewards acts as a kind of bribe to encourage travellers to choose one particular airline or travel unnecessarily. Most companies consider the miles earned by their employees to be a valuable personal perk that in part compensates for the daily grind of frequent business travel, though some governmental organizations have attempted to prevent their employees from accumulating miles on official travel. For example, Australian Public Servants are not permitted to redeem points accrued from official travel.

Some programs allow donating frequent flyer miles to certain charities. While the Canadian government will honor these donations as a charitable gift, the difficulty here is getting a tax receipt for those points from the company itself. This policy also appears to conflict with the position that reward points are taxable in the first place.

On the airline side, the points represent potential non-revenue travelers on its books. These must be carried forward on balance sheets as an outstanding contractual debt for an indeterminate time, although the actual value (or loss) may be difficult to determine for any particular period.

Climate and environmental issues

Frequent flyer programs have been receiving scrutiny because of the prevalence and rapid growth of air travel, in terms of both the frequency that individuals fly and the tendency toward longer distance travel. There have also been calls for an end to frequent flyer programs. An increase in the number of hypermobile travellers
Hypermobility (travel)
The term hypermobility in regard to travelers arose around 1980 and is a concept that has increased in useage since the early 1990s: Damette ; Hepworth and Ducatel ; Whitelegg ; Lowe ; van der Stoep ; Shields ; Cox ; Adams ; Khisty and Zeitler ; Gössling et al. ; and Mander & Randles...

 has been identified as a particular aspect of the issue, because of the highly disproportionate contribution of this class of individuals to aviation greenhouse gas emissions, and frequent flyer programs are a contributing factor.

Precedent exists for ending frequent flyer programs. In 2002, Norway banned its domestic frequent flyer programs in order to promote competition among its airlines. In the U.S. in 1989, a vice president of Braniff "said the government should consider ordering an end to frequent-flyer programs, which he said allow unfair competition."

Asia

  • Air China Phoenix - Miles expire 2 complete calendar years after they are earned.
  • All Nippon Airways ANA Mileage Club - Miles expire 36 months after they are earned, except for ANA Mileage Club Diamond elite members.
  • Asiana Club - Expiry dates vary upon level of membership. Silver and Magic level members' miles expire after five years, Gold and higher level members' miles expire after seven. Corporate members have only one year to claim mileage. Miles earned before 30 September 2008 will never expire.
  • Bangkok Airways Flyer Bonus - Miles expire 36 months after they are earned.
  • Cathay Pacific / DragonAir Asia Miles expire 36 months after they are earned.
  • EVA Air Evergreen Club - Miles expire 36 months after being earned.
  • Japan Airlines Mileage Bank - Miles expire 36 months after being earned.
  • Jet Airways - Miles expire after 13 quarters.
  • Korean Airlines SKYPASS - Miles expire 10 years after being earned. Miles earned before 30 June 2008 will never expire.
  • Malaysia Airlines Enrich - Miles expire one year after being earned, but members can extend the validity of their miles for an extra year after paying a fee to do so or by becoming Enrich Platinum elite members.
  • Philippine Airlines Mabuhay - Miles expire 36 months after being earned.
  • Singapore Airlines KrisFlyer - Miles expire 36 months after being earned (can be extended up to 12 months for a fee).
  • Thai Airways International Royal Orchid Plus - Miles earned in one calendar year will expire at the end of the third calendar year after accrual.
  • Vietnam Airlines Golden Lotus Program - Miles earned will expire two years after two years on the member's sign up anniversary month.

Europe

  • AirBaltic BalticMiles - Reward miles expire after 3 years after the day they are first earned
  • Miles & More
    Miles & More
    Miles & More is the largest traveler loyalty program in Europe with 20 million members as of February 2011. It offers rewards to passengers of the Star Alliance travelling on certain types of tickets...

     (Lufthansa, Air Dolomiti, Augsburg Airways, Contact Air, Eurowings, Austrian Airlines, Brussels Airlines, LOT Polish Airlines, Swiss International Air Lines as well as regional airlines: Adria Airways, Croatia Airlines and Luxair) - Miles expire 36 months after date of earning for non-elite members with no Lufthansa-branded credit card, or 36 months after loss of elite status for currently elite members.
  • Turkish Airlines Miles&Smiles - Collected miles (flight, hotel stay, car rental) expire at the end of the third full calendar year following their collection.

Middle East

  • Skywards - Miles expire at the end of the month of the traveller's birth, 3 years after earning (however, you can use them to book a reward ticket that is valid for up to 12 months).

North America

  • American AAdvantage
    AAdvantage
    AAdvantage is the frequent flyer program of American Airlines. Launched May 1, 1981, it was the second such loyalty program in the world , and remains the largest with more than 67 million members as of October 2011.Miles accumulated in the program allow members to redeem tickets, upgrade service...

     - Miles expire after 18 months of account inactivity.
  • Air Canada Aeroplan
    Aeroplan
    Aeroplan is a Montreal, Quebec, Canada based coalition loyalty program owned by Aimia , a global leader in loyalty management. The Aeroplan Program was created in July 1984 by Air Canada as an incentive program for its frequent flyer customers...

     - All mileage in an account expires if the Aeroplan member has not accumulated or redeemed Aeroplan Miles for a period of 12 consecutive months. Mileage in an account expires 7 years (84 months) after the date of accumulation. Mileage may expire without further notice.
  • Continental OnePass - Miles don't expire, however, accounts may be closed or miles forfeited after 18 months of account inactivity. Will be phased out by December 31, 2011 and to be combined with United's Mileage Plus program.
  • Delta SkyMiles
    SkyMiles
    SkyMiles is the loyalty program of Delta Air Lines that offers rewards to passengers travelling on certain types of tickets. Created in 1981 as the "Delta Air Lines Frequent Flyer Program"; its name was changed to SkyMiles in 1995. When the frequent flyer program was first established in 1981, new...

     - Miles never expire.
  • United Mileage Plus - Miles expire after 18 months of account inactivity. Will absorb Continental's OnePass program on approval of merger with Continental Airlines
  • US Airways Dividend Miles - Miles expire after 18 months of account inactivity.

Mileage run

A mileage run is an airline trip designed and taken solely to gain maximum frequent flyer miles, points or status. If a traveler has already achieved some sort of elite status they will be earning bonus miles on top of their actual flight miles, and consequently they will reach their goal sooner. A mileage run may allow a traveller to (re-)qualify for a beneficial elite level which requires a minimum number of miles for qualification.

Those who deliberately book mileage runs are known as mileage runners.
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