Special Report on Long-Haul Air Travel: Fidelity can equal free flights: Simon Calder examines the rewards of loyalty incentives

MY BANK account may not be healthy, but I am heavily in credit with several organisations. I have 52,593 Continental OnePass miles, four United 5,000-mile AwardCheques, 1,100 Virgin Freeway points and 1,648 British Airways Air Miles. Oh, and 25,654 useless miles on now- defunct Pan Am.

Frequent flyer miles are a simple concept. The more you travel with a particular carrier, the more you are rewarded for your loyalty. Usually the award is another flight.

From the traveller's point of view, this is a valuable prize. It can be used instead of a paid trip over the usual route, or as a vacation journey. Either way it has tangible value; the recent Hoover promotion showed the astonishing demand that exists for free flights.

As far as the carrier is concerned, the idea is that you will fill a seat which would otherwise be empty. The airlines' international organisation, Iata, has just announced collective losses amounting to pounds 7.4bn for the last three years.

The basic idea was that the more you travelled, the more free flights you earned. Frequent flyer schemes began in the USA. They initially worked by registering the number of miles actually travelled. The New York- London segment, for example, scores 3,458 miles. Once certain targets are reached, you qualify for awards.

This proved an inflexible system, so the tweaking began. In order to reward commuters who took lots of short but expensive flights, minimum awards of 500 or 750 miles were established. Then certain routes were pushed by awarding double or triple points. Some airlines went further and began to give bonus miles for travel at unpopular times of the year. All my 52,593 Continental miles were earned on a single Australia-to-London trip in October, where every sector seemed to turn to gold, earning at least triple miles.

Gradually, the amount spent, rather than simply the distance flown, made an effect. Travel business or first class, and the rewards increase rapidly. A flight from London to the USA in Virgin Atlantic's Upper Class earns enough Freeway points for a free ticket on the same route in economy.

Other components of a journey have gradually been added to the schemes. Stay in the right hotel chain, rent a car from the right company and pay for them with the right credit card, and what the airlines like to call 'a world of opportunities' opens up.

Some journeys do not qualify for any miles. Increasingly airlines are excluding discounted tickets from frequent flyer schemes. For people who travel at full fares, however, it seems plain sailing. Once you add the opening bonus (typically 10,000 miles for new members), it does not take long to amass enough for a journey.

How easy is it to cash them in? On a wet Tuesday in October, most flights have a good few places available, and your chances of getting a free ticket are high. Peak periods are likely to be barred to freebie flyers. It can be galling to learn that airlines impose strict limits on the number of seats on each flight which can be given away. Plenty of travellers have been told flights are full to would-be redeemers, only to find they can buy tickets on the very same service. The black art of capacity control can blight the freeloader's life.

Just as promotions give extra points on certain journeys, the number of miles needed to claim a free flight is sometimes cut for a particular route. The new British Airways link between Manchester and Los Angeles, for instance, 'costs' only one-quarter of the normal number of Air Miles between now and June.

Only recently have the airlines realised that some frequent travellers prefer rewards which do not involve air travel. Virgin Freeway has some stylish alternatives: power-boating, go-karting or riding on the Venice-Simplon Orient Express. If you insist on flying, Virgin offers hot-air ballooning, though not (you may be relieved to learn) with Richard Branson on board.

The bottom line, for the passenger and the airline, is - do the schemes work? For passengers, the answer is a resounding 'yes': you can get something for nothing, though it might not be a flight at the ideal time. For the airlines, the rewards are harder to define. Now that most carriers operate a frequent flyer scheme, passengers just take whatever is offered by each carrier and travellers are becoming more fickle. Which is why you can easily wind up with a pocketful of 'loyalty' cards and a string of accounts.

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