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SCMP Reporter

BOOK a flight, reserve accommodation and a set of wheels for when you land, pay for the lot by plastic and in return get a free flight to Utopia.

  The prospect is tempting. Frequent Flyer Programmes (FFPs) are the latest carrot being dangled by the airlines to cajole passengers into travelling more loyally, more often.

  And with hotels, car hire and credit cards part of the deal, the equation is getting more complicated.

  But just as there are no free lunches, free tickets are something of a mirage. Somebody ends up paying, and not everybody is happy with their lot.

  One thing is not in question, however. FFPs are here to stay, and will continue to shape travel habits for many years to come.

  In reality, FFPs are a disguised form of discounting. Instead of just reducing fares across the board, airlines keep prices the same but give away some free seats.

  ''Although it's not the intention, a disguised discount is the net result,'' said local industry-watcher Mike Sullivan. ''The whole point is to hook the passenger up into one airline or programme.''   FFPs are a recent introduction to Asia, brought in to kick-start traffic out of the doldrums which followed the Gulf War.

   More importantly, foreign carriers have been poaching customers away from Asian airlines by the plane load.

  Passages - an FFP put together by Cathay Pacific, Malaysia Airlines and Singapore Airlines - is typical of the new breed. Aimed at business and first class passengers, and linked with major hotels like Hyatt and Hilton, it is very much the shape of things to come.

    Sullivan said: ''In time there will probably just be two or three major airline alliances, brands A, B and C, fighting it out for customers, which could be a bit messy.

  ''Passages got going so fast because FFPs like the one run by Qantas were making substantial in-roads. It wasn't so much a knee jerk reaction but it did hurry them up.''   FFPs are aimed primarily at business travellers, to lure them into taking extra or just simply regular flights.

   As a reward they get another flight for their personal use. But for jet-lagged executives the prospect of climbing aboard a plane again may be the equivalent of a free jaunt on the MTR.

  Alternative rewards - balloon rides, the services of a top chef, or a day motor racing - are more attractive to airline and many passengers.

  ''The airlines would prefer to do it that way,'' said Sullivan. ''It's cheaper for them than giving away seats.''   But others are still happy with straight free mileage, and though alternatives to free air miles are being looked at by airlines, they are still beyond the horizon.

  Holly Shamask, a locally-based fashion designer, frequently has to fly to the US and other destinations.

  ''I have been signed up with United Airlines since 1983,'' she said. ''Whenever I make a business trip, I acquire more points, and so far I've had free trips to Africa once and to Europe about half a dozen times.

  ''So I always try and fly with United, especially as I gain points when I use my credit card too.''   The introduction of the Hongkong Bank's scheme to award mileage points with United is another significant trend in FFP development, as airlines sign up partners to help them bear the burden of giving away free seats.

  Martin Tyler-Bennett, general manager of International Customer Loyalty Programmes, estimates that a quarter of all miles flown by passengers on the world's airlines are through FFPs.

    ''There are enough frequent flyer miles in the system worldwide to fill more than half a million fully laden jumbos,'' he said.

  The financial benefits of FFPs to airlines are by no means a sure bet. Thai International reportedly stayed out of Passages because management was not convinced of a good return, and introduced its own Royal Orchid Plus scheme.

   Mike Sullivan said: ''The effects of Passages on the carriers should become clear fairly soon. But if an airline gets its sums wrong, it can be in serious trouble.''   Airlines need to build the right benefits into their FFPs as well. Passengers will vote with the company plastic if they don't feel they are getting their just rewards.

  John Garden, marketing manager with the NYK shipping line, was signed up with British Airways. ''I'm British and I was happy to fly the flag, but now I am switching to Cathay Pacific.

  ''I took five or six long haul flights with BA over 18 months, and as I did not buy the exact tickets stipulated in the programme I got nothing out of it. So as I'm based in Hong Kong I'm switching to CX.''   Not all FFPs have been a success, and the cautionary tales are a dire warning to airlines and associated companies alike.

   In Britain last year one firm promised enough air miles for a trip to the USA to anyone who bought one of their vacuum cleaners, which retailed for about HK$1,000.

   They sold out very fast indeed, and the management team responsible for the scheme was sacked soon afterwards.

  At the other end of the scale, Northwest Airlines found they had too many miles in the system, but managed to bring forward the expiry date and so got out of it that way.

  In future, it looks like FFPs will become a significant fixture of the air industry, despite their unpopularity with travel agents - already operating on very tight margins - who have to do the bookings but get no commission for their trouble.

  The only cloud on the horizon is the possibility of taxation, which has been introduced in Australia.

   Unless it can be proved that an FFP is an incentive, and not a sophisticated freebie, then it is subject to tax.

   The government in the United States attempted to introduce a similar system, but was repelled by the difficulty of implementing it.

   Sullivan said: ''They had a good go at getting in, but found it would be too complicated to chase everybody up. I guess Australia is just greedier.''   FFPs offer passengers one of the best financial deals they have ever had on the airways. How the airlines will fare will depend on a delicate balance of the glittering rewards they offer and how much they actually cost to provide.



Asian airlines go the distance