Maximising the benefits of frequent-flyer schemes

"Ladies and gentlemen, we don't have enough food for everyone, so we are offering the choice of a turkey sandwich or 500 frequent-flyer miles."

No, not the scene in one of Sainsbury's cafes on a busy Saturday; this was the in-flight announcement on a recent - and completely full - Northwest Airlines flight from Minneapolis to Denver. Confirmation, if any were needed, that these days frequent-flyer miles are an important way of keeping the passengers happy.

Frequent-flyer programmes began in America, and the idea was taken up by British Airways in the mid-1970s. Initially, BA was content with formalising bonuses for commercially important passengers with its Executive Club, for which passengers paid a fee.

Gradually, though, European airlines developed reward systems based on distance and class flown. As the manager of one programme said, "It was like a domino-effect. Other people had frequent-flyer schemes, so we all had to have-them".

All the airlines are convinced there are benefits for them in running such schemes; they believe that loyalty schemes of this type increase the overall number of passengers travelling and tie people into a particular airline and its services. Virgin Atlantic talks of a sense of ownership among its members and identification with the company. A scheme's membership list helps an airline to build up a detailed database, and so tailor the service they provide. If, for example, you have disclosed in a questionnaire that you like skiing, you could expect to be presented with a ski magazine as you are settling into your seat; perhaps more likely, though, is that you will be targeted by direct mailshots for skiing holidays.

For anyone who travels even a modest amount, frequent-flyer schemes provide an opportunity to get something for nothing. Assuming you are going to spend a bit on air travel, car hire, or a night in a hotel, you are well on your way to a free flight. But as with any form of investment, there are ways of maximising your assets, whether you are a holiday flyer or long-haul business traveller.

First, choose your scheme carefully. The advice from the airlines is join the scheme of the carrier you use most. I suggest you join several, but choose them carefully. All the airlines have reciprocal arrangements with their partners, so you should only join one scheme in a group. For example, SAS and Lufthansa are partners. So if you are a member of the SAS scheme, and then you fly Lufthansa, you will earn points on your SAS account simply by showing your membership card; there is no need to join the Lufthansa scheme. In fact it is counter-productive to join both as, in effect, you dilute your investment.

The annual Carlson Wagonlit business travel survey shows the British Airways Executive Club to be the favourite of four out of five UK business travellers. Flights are graded to earn you points towards silver and gold membership, which in turn brings separate benefits such as use of the special lounges with silver, free insurance with gold. But the way in which you earn frequent-flyer miles involves a rather complicated tie- in with Air Miles, which is a British Airways company, but operates as an independent loyalty scheme. BA doesn't see the collecting of miles as the main point of the Executive Club. Indeed, the scheme is easily the least tolerant of reduced fares. If you travel on a discount ticket you get no frequent-flyer miles at all. Whereas most airlines allow you some miles simply because you got on the plane, if you have anything less than a fully-flexible ticket you earn nothing on BA. In fact, you could more profitably spend the weekend at Sainsbury's. There are signs that BA's policy is spreading, with United planning to thin out rewards for discount fares.

The emphasis on customer service to reward loyalty is certainly the main objective in many schemes, particularly in America, where the big rewards, in terms of preferred seating, automatic upgrades, or early boarding, as well as free miles, are given to a small group of serious flyers: Gold Elite on Continental, Advantage Gold on American, or Delta's Flying Colonels. The airlines will try hard to keep these high-yield passengers.

For a really frequent flyer, amassing points of miles which contribute towards free flights can be a mixed blessing. What could be nicer than a free ticket to Australia? Well, if you have spent most of the year flying around the world, possibly a weekend at home. Here, alternative benefits such as Virgin Freeway's luxury UK holidays or Air Miles' cinema tickets can be tempting.

Should travel prove too much of an addiction, then be warned that even unpopular routes may not be easily available. I have just tried to book a ticket to Greenland using SAS frequent-flyer miles. This, in theory, is a textbook example of how to maximise the benefits of free tickets, by choosing a route where discounted fares are never available. When I expressed disbelief that the flights were already full every day between early July and the end of August, I was told that they were simply not open to those travelling free. But with some perseverance, I found a seat to Sondre Stromford.

Too complicated to be worth the effort? Well, a friend of mine recently took a return flight from New York to Washington. He earned points in both directions. It was his eighth flight of the month, so he got a bonus. The plane was late in both directions, which earned him two more bonuses. By the end of the day he had enough for a free flight across the US.

By the way, you don't earn frequent-flyer miles on flights which you paid for with frequent-flyer miles. Well, officially you don't. But sometimes the people on the check-in desks aren't as vigilant as they might be.