Graphic: Joe Anderson

Ben Schlappig is homeless — but he lives a life of luxury. The 28-year-old Florida native lives year-round in five-star hotels worldwide, mostly flying first or business class. This would cost “more than $1m a year”, he says, although he spends “a very small percentage of that” in actual cash.

He manages to live like this because he is a self-described “air miles nut”, who has been “obsessively collecting miles since I was 15”. In January, he flew first class from Abu Dhabi to Sydney entirely using points, his e-ticket shows.

For most of the summer of 2014, he sweltered in the 40-degree plus desert heat of the United Arab Emirates. Mr Schlappig lived in five-star hotels, paying off-season room prices to collect loyalty points as cheaply as possible. He converted these to miles or used them for higher value vacations.

He saw in the 2016 New Year from a 100 sq m private villa in the Maldives, using hotel points to fund a stay that would otherwise have cost $8,000. “We call it mattress running,” he says.

Data suggest that most people, however, fall far short of Mr Schlappig’s results when exploiting the potential of miles collected when flying, using airline-linked credit cards or even shopping at supermarkets. American Airlines is sitting on a pile of approximately 854bn unclaimed miles from its Advantage programme, according to its latest annual report. Lufthansa, the German airline, has 211bn.

Few users of air miles will have the time, expertise or commitment to permanently transform their travel options, but many will be able to learn from the techniques Mr Schlappig and others apply to improve the rewards they gain from the loyalty system. With the right earnings strategy and clear travel goals in mind, it is possible to avoid economy class without encountering any financial turbulence.

“Decide your [travel] goal, decide the [loyalty] programme you want to be part of, and then decide what the best earning methods are for you,” says Mark Beattie, a North London-based IT manager and magistrate, who says he has collected miles since 1982. “It can be simple.”

How to get started

A good way to start out with miles is to think about travel well ahead of time. Airlines typically open flights 11 months in advance, and this is one of the best times to bag reward seats (the other is at the last minute).

If you have no miles, you cannot buy seats for next May. But you can join a group of airline loyalty schemes and see what business or first-class flights are available to be paid for with miles in May 2017. The same seats are also likely to be available in May 2018 — when you may be in a better position to make a booking.

Pick your destination goal, and select an earnings strategy that will have netted you the right amount of points in a year’s time.

“Deciding where you would like to go is easy,” Mr Schlappig says. “You also have to know how realistic this is.”

How to find the best seats

Air miles ingénues must think carefully about how to select their travel options. Mr Beattie, a luxury travel hobbyist and blogger who earns 400,000 miles a year with British Airways’ Avios scheme, says a good way to narrow down your goals is to avoid airlines’ most popular routes. “Sydney over Christmas could be impossible,” he says. Transatlantic flights with British Airways can also be thin on the ground, as business and first-class seats on these routes are popular with paying customers.

Airlines offer reward seats on less popular routes because they are an “alternative discount channel”, says Gerald Khoo, an airline analyst at investment bank Liberum Capital. Airlines do not want to lower prices publicly as this would affect the common perception of what a business or first class seat ought to cost. Seats paid for in miles are “a targeted promotion, which is not necessarily a transparent public discount,” says Mr Khoo.

This does not mean that aspiring first-class flyers should aim only for the least desirable destinations, such as the Caribbean during hurricane season. But to get the best value, think about flights that will not be in demand at certain times of the year. Investment bankers or chief executives may not feel too excited about flying on business to scorching Miami in July, so they may take that flight in June instead.

“Business class seats can be available during the school holidays on some routes that are most popular with holidaymakers,” Mr Beattie advises.

Bear in mind, too, that air miles have variable exchange rates that are not set by a rational market, but by the whims of staff at loyalty programmes.

Long haul or very short haul

Avoiding medium-length flights is another piece of advice from the expert points users: long haul and very short haul flights can offer the best value on loyalty schemes. British flyers should consider Barcelona or Johannesburg, for instance, but spend cash instead to earn more miles if they take a trip to the US.

A family of two adults and one child hoping to travel from London to New York next May, spending two weeks in the Big Apple, will have to use 323,250 of BA’s Avios points for three business class tickets. They will also pay almost £1,300 in taxes and fees, the BA Executive Club website shows.

Yet it is currently possible to find flights to Athens for the same family, in the same month and in the same fare class, for 76,000 Avios. The cash payout for taxes and fees is a mere £192.

A business class ticket from London to Barcelona, meanwhile, costs 19,250 Avios and £59 in extra charges.

Guy Anker, managing editor of MoneySavingExpert.com, says: “Medium haul, such as London to New York, can be very poor value, especially in terms of the extra taxes and surcharges that have to be paid. You can get an economy flight for this journey for £500. If you used your miles to pay for that ticket, you would probably shell out £350 in taxes.”

Earn miles from flying

Having worked out where you might end up flying with your miles, it is time to decide how to earn them. This very much depends on your lifestyle, and whether or not you are lucky enough to have an employer who will fund business class flights.

Airlines historically gave out rewards based on how far travellers flew. “Now they mostly reward you for the money you have spent, and the loyalty schemes are marketing tools aimed at increasing your spending,” says Jonathan Meiri of Superfly Insights, a consumer data analysis company that has a unit focused on frequent flyers.

BA’s Avios scheme last January slashed the miles it paid to flyers who buy its cheapest tickets by up to 75 per cent. At the same time, it boosted the miles it would hand out to business and first-class ticket purchasers by up to 300 per cent.

American Airlines was one of the last major carriers to pay awards based on distances flown, but it will bring its AAdvantage scheme closer to the BA-style system in mid-2016.

Airline loyalty schemes also push their biggest spenders up to the top tiers of their reward programmes. A “gold” member of BA’s Avios scheme will get 100 per cent bonus miles for each journey they take.

Mr Beattie, a member of the “gold” club who is happy to pay for flights from his own pocket when cash tickets are better value than using Avios, says a BA flight from London to New York in business class can earn you 16,000-17,000 Avios. As we have already seen, that is almost enough for a free business class round trip from London to Barcelona.

Travellers should allocate as much of their budget as they can to their most frequently used airline, and any of its partners whose points can also be banked in its reward scheme.

Switching constantly between airlines that do not have alliances with each other will mean racking up small pots of reward points. “Points get trapped so you have to spend them, but you don’t have many so you are left going ‘maybe I can get a toaster’,” Mr Meiri says.

Travellers can gain reassurance from the scale of the big airline alliances, however. Anyone who flies regularly with United Airlines, for example, can collect points for its membership scheme with all members of the Star Alliance group, from Singapore Airlines to Ethiopian Airlines. BA is a member of One World, which also includes Air Berlin, Finnair and Qantas.

“It used to be a case of one airline, one flyer scheme,” says Mr Beattie. “Nowadays you have to know which flying team you are in. You need to be faithful. If you are flying to the Middle East, stay within your alliance.”

Earn with hotels and credit cards

Airlines’ drive to use their loyalty schemes to attract the biggest spenders has been unwelcome news for Xavier Sagaert, a 40-year-old Belgian doctor and cancer research specialist, who travels globally to conferences, but whose employer does not pay for business class flights.

Mr Sagaert still manages to travel in style without spending too much of his own money. He earns 100,000 to 200,000 miles a year, he says, calculating that “one-third of this is earned from flights, one-third from hotels and one-third from credit card spending”.

A member of the American Airlines’ scheme, he usually stays in Starwood Hotels, he explains, because their loyalty points can be transferred into his airline’s AAdvantage points. He also has a credit card that rewards him with miles from Lufthansa’s loyalty scheme. He says this is not ideal, because Lufthansa and AA are not in the same alliance. However, airline-linked credit cards have seen limited take-up in continental Europe, so he has little choice.

US and British credit card users have more flexibility. For people resident in the UK, Mr Anker of MoneySavingExpert.com recommends one offered by American Express. The “Preferred Rewards” Gold Card costs £140 a year, but gives 20,000 bonus points for spending £2,000 in the first three months of membership. These can be banked as BA Avios points.

Mr Anker calculates that anyone spending £20,000 a year on the card will earn about 55,000 Avios, which was enough, at the time of writing, for a round trip business class flight to Marrakech — not bad for £140. Couples should consider getting one of these cards each if their spending is going to be high enough, Mr Anker advises.

Become a miles arbitrageur

To get the best rewards, you have to arbitrage. Different airlines have different records and reputations for generosity with reward seats. But often, two airlines with wildly differing approaches to paying out are in an alliance. So you can earn miles with a good points payer, and spend them with a partner airline that is better known for giving out reward seats, perhaps because it is struggling to fill certain routes.

“The airline you want to fly with and the airline you earn from are often two different partners in the same [loyalty] network,” Mr Schlappig says.

Mr Sagaert says he mainly uses his American Airlines miles to travel with Etihad, its partner, because it “has a lot of availability” for reward seats to his preferred destinations.

According to consultancy IdeaWorks, Air Berlin is the best airline for giving out reward seats. In a survey of big worldwide carriers conducted in May, the German airline offered reward seats every time it was asked for them. Near the bottom of the table was American Airlines, which gave reward seats 56 per cent of the time it was asked. BA was mid-ranking, at 73 per cent.

Mr Schlappig, who runs a consultancy, PointsPros, that helps people organise their miles, recommends looking for deals where you can buy loyalty points from airlines at discounts. He points out that Avianca, a Colombian airline, often sells its “Life Miles” with a 125 per cent bonus. This means anyone buying 1,000 gets another 1,250. These can be redeemed across airlines in the Star Alliance.

Consider ‘miles runs’ if you have the option

On Flyer Talk, an online community of points enthusiasts, one traveller was recently mulling a round-trip with Ethiopian from Kigali in Rwanda to Hong Kong, costing £624 in economy but awarding a bumper 13,000 miles that can be spent with any airline in the Star Alliance network. As a comparison of costs and benefits, a business-class round trip from Heathrow to JFK booked through the loyalty scheme of Cathay Pacific pays out 8,000 miles.

Flying from Rwanda to Hong Kong may be an exotic choice of route, but professionals who travel internationally have good opportunities for so-called “miles runs”, particularly if they are given permission to fly business class.

Mr Beattie spends time seeking these deals out, and says Hawaii has recently been a profitable destination for miles runs for Avios. He recommends finding out when airlines introduce new routes, as either they or a competitor who is already flying that route may have special offers. This year, he earned points flying business class from Dublin to Hawaii, spending just £900.

One way of thinking about air miles is as a currency that airlines pay out in return for travellers’ loyalty. “Miles are funny money,” says Superfly Insights’ Mr Meiri. “They are really a marketing tool for the airline and as a currency they are manipulated to get the best benefit for airlines.”

It follows that those who spend only modest sums may find it hard to benefit from a system skewed towards the most frequent, wealthy or business-oriented users. But if you or your company are paying for several high-value flights a year, following a properly thought-out air miles strategy can pay out big dividends in the sky.

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