Have you ever wondered how all those people are flying in First Class these days? The fact is a large proportion of them aren’t paying for it. After all, paying thousands of extra dollars for a first-class seat is a lot of money.
If you think that air miles are earned by flying frequently, you would only be partially correct. If you are one of those passengers that earn frequent flyer miles from actually flying, then you have very likely overspent–unless you have found a very cheap fare.
Looking back 20 years ago, you either had to be very rich or on a business trip with a generous boss or corporation to be sat at the front of the plane. it was regularly assumed that many passengers in suits were not paying off their own dime. Over time, companies have drastically scaled back expenses for perks such as first-class flights. Many employees below the executive level will be stuck in coach, yet regularly, first-class and business-class cabins are full.
So how are people paying for first and business-class seats? Increasingly, the answer is with air miles, but these aren’t necessarily accumulated from flying. Credit card introductory offers, bonus miles and online store spending are what boosts air mile tally’s very quickly.
The unfortunate news is that the ways to redeem miles on flights is slowly reducing, as airlines are charging more for redemption flights in premium cabins. There are more people than ever playing the same game, with multiple websites offering ‘air miles’ tips that are largely designed to make revenue from selling credit cards. With the size of the pie for credit cards reducing, yet a finite (if not relatively smaller) amount of air miles rewards seats, unfortunately redeeming air miles will only continue to become harder. However, earning miles looks set to become easier. Every credit card wants your business, and many of these credit card companies offer introductory bonus’ that are enough for a first-class flight straight off the bat.
Use the above example as a comparison of how to calculate air miles’ relative valuation. Firstly, signing up for a credit card that allows you to transfer your points to many different airlines is key, such as Chase Sapphire or American Express Gold or Platinum. The amount of points you earn for spending and your sign up bonuses will depend on which category of card and importantly what country you’re based in. The consistency is that you can transfer miles to many different airlines, and as certain airlines are in different alliances this allows you to cover almost any airline you may want to fly on.
For example, Emirates, Singapore and British Airways are all airlines where points can be directly transferred to from credit cards such as American Express. With British Airways being in the One World alliance, this means you could book a range of airlines such as Japan Airlines, Cathay Pacific or American Airlines by using these Amex points in your British Airways account. The key with these credit cards is to use them as charge cards and never pay interest on your balance—clear your balance every month and just take the points. The card companies are making money from merchant fees above and beyond interest.
The sign-up bonus is without a doubt the fastest way to earn big points. The amount depends entirely on what card you get and the country you reside in. It’s also worth looking out for when providers have limited time offers. Undoubtedly the best sign up bonuses for cards are in the U.S. where Capital One offers 50,000 bonus miles of their Venture Rewards card (enough for a one-way trans-Atlantic business class seat). There are many cards (particularly airline-specific cards such as Alaska Airlines who may offer 70,000 bonus sign-up points but be more wary of individual airline cards as you can’t transfer points between different carriers). Alaska does happen to partner with many airlines, so this card is actually a good choice, however, just bear this in mind.
In Australia, there are examples of various American Express cards offering up to 100,000 bonus points for signing up too, but in the U.K. this may be as low as 20,000.
As a simple rule, whatever your currency is will lead to £1/$1/€1 being equal to one point, or one air mile. This is fairly standard across most cards, but if you know where you can multiply your spending power, your points can add up very quickly beyond this base spend. For example, the Capital One Venture Rewards card is currently offering a staggering 10x on hotel spending through 2020 and Chase Sapphire offer 2x at any restaurant. Those multipliers add up fast. If you get airline-specific cards (and tend to fly one airline a lot) then you can get 3x and 4x bonuses on a lot of specific spending. Wells Fargo Propel offers 3x on almost all daily spending, and cards in the U.K. such as the British Airways Premium plus American Express offer 1.5 points for every £1 spent as standard.
If you think that most of these air miles review websites are making money from credit card referrals then you would be very right. Who is paying for this? The credit card companies. Credit card providers are competing hard to bring in new customers, so rather than line the pockets of third party websites, ensure that you get your referral bonus yourself. Some cards can offer up to 15,000 points just for someone to click a link you send when they get a new credit card, up to a limit of around 75,000-90,000 points per year for referrals. So ensure that you are getting those points to introduce a friend, family members, or even someone on the street. It can mean a great free flight!
Lots of cards will have online stores to purchase goods, with incredible points bonuses. For example, the British Airways eStore is the best ways to build up points on spending if you’re based in the U.K., as the spending multipliers on everyday spending are not as good compared to the U.S. As an example, at any given time there will be promotions to earn 6:1 or 12:1 if you’re spending in certain online stores, so why shop at the high street? There are even staggering promotions for luxury fashion of up to 30:1 points. One big purchase there for Christmas can be enough points to get you a business class flight.