Planning a vacation, but spooked by soaring air ticket prices? Here's what you can do 

If you are a frequent traveller, then you must be feeling the pinch of rising flight tickets, especially around the festive season. This is because the average price of tickets from metro cities like Delhi and Mumbai to Tier 2 cities has risen as high as 30 per cent compared to last year. The trend is same across the country. One of the reasons for expensive flight tickets is the increase in the price of Aviation Turbine Fuel (ATF) by around 80 per cent as compared to last year. Another reason is the lifting of Covid curbs that has led to the rise in the number of bookings as compared to the last year.

In such a situation there is one way to reduce your traveling cost: Credit cards. Credit cards offer reward points or travel mile programs, which are designed for those who travel quite often. Most travel credit cards provide accelerated earnings on travel spends resulting in higher points/miles accumulation which, in turn, translates to higher savings on redemption. However, the actual savings will differ from one card to another as the redemption rates and modes vary.

“Each card has its own system of awarding miles every time you use the card. Some credit cards offer air miles in place of reward points whereas others allow you to convert reward points to air miles. Some are co-branded with popular airlines, some with loyalty programs while others offer basic air miles that are redeemable in several ways. As a result, the redemption process also varies from card to card,” says Sachin Vasudeva - Director, Paisabazaar.

For example, Citi PremierMiles Credit Card lets you earn ‘Miles’ which can be used to get a discount on your flight ticket but this can be done in many ways. You can choose to ‘pay with points’ on a third-party platform like MakeMyTrip, Goibibo, etc. or transfer them to an eligible airline loyalty program. The redemption rate also varies accordingly. On the other hand, if you have an airline co-branded card, points may be redeemable under the airline’s frequent flyer program only.

How to earn and redeem air miles? “In most cases, air miles will be converted to future travel purchases, including airfare, hotel accommodations, ground transportation, travel package deals, etc. The value of air miles depends on your usage. For instance, a co-branded credit card may offer you 4 miles per Rs 100 spent on the card. However, you get 30 miles per Rs 100 spent if you book airline tickets with the partner airline via their website. Then there are sign-up bonus miles and miles for reaching spending milestones on the card. The same applies to redeeming points and air miles as well. Your issuer may allow you to redeem air miles against flight tickets, hotel bookings, or even package tours. So, you'll need to look up what it would cost you to book your hotel room or airfare using cash instead of air miles or reward points,” says Pankaj Bansal, CBO, BankBazaar.com.

Bansal explains, for instance, that you may be eligible for a 40 per cent discount on your hotel or a free air ticket. You need to calculate what is better. For instance, redeeming rewards may save you Rs.15,000 on hotel bookings while the cost of the flight ticket may be only Rs.10,000. So, you need to understand what rewards to leverage. Make sure to factor in the redemption charges as some issuers charge a redemption fee at the time of redemption. 

Credit cards offering travel points/miles are usually co-branded with popular airlines or travel portals. The usage should, therefore, be planned accordingly in order to optimise the rewards. The redemption value of the travel points matters the most. “In most cases, 1 point does not mean Rs. 1, this is why understanding the redemption rate is important. Similarly, for cards that allow reward point conversion into air miles, the rate of such conversion matters. Understand the reward structure, compare the rates and read the fine print before availing the facility,” explains Vasudeva.

"Some of the most popular travel credit cards that offer air miles are Citi PremierMiles Credit Card, Axis Vistara Signature Credit Card, Intermiles HDFC Signature Credit Card and Air India SBI Platinum Credit Card. Most air miles credit cards in India are co-branded with popular airlines and offer air miles under the said airline’s loyalty program. For example, Axis Vistara Card offers Club Vistara Points and Air India SBI Card offers Air India Air Miles. Such co-branded cards are useful if you prefer a particular airline," adds Vasudeva. 

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