Jet Airways sells loyalty miles in advance to raise Rs 2.5 billion Noor Arora
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.
ARTICLE SOURCE: BS