Jet Airways sells loyalty miles in advance to raise Rs 2.5 billion

Jet Airways has tapped into its loyalty programme to overcome its tight liquidity situation.

The cash-strapped airline has raised over Rs 2.5 billion from the advance sale of redemption miles to its subsidiary. The loyalty programme is run by Jet Privilege Private Limited (JPPL), a company Jet Airways co-owns with Etihad Airways.

Accrual and redemption of miles is a transaction between two companies. While Jet Airways pays JPPL for accrual of miles, it gets paid by JPPL on redemption of those miles by a customer. The redemption cost is agreed on per mile basis and accounts are settled every month. With this transaction, JPPL has paid in advance for the entire year, a source said.

“This is like a forward sale of tickets and is legitimate. JPPL would have secured a discount on redemption payment for making the advance purchase,” said an aviation source. In the past too, Jet Airways has sold redemption miles in advance to banks to tide over its financial crisis.