The cost of Redeeming Miles

Why do I have to pay for my ‘Free’ Award Ticket?

One unique feature about the Free awards airlines give is that they are not really ‘Free’. While Hotels give absolutely free stays when they give awards, airlines charge you when redeeming Airline Miles.

The cost of redeeming miles should be taken into consideration when one is planning to redeem miles for free awards.

Here are a few:

Taxes:

Yes, Uncle Sam and all the other uncles, aunts and second cousins twice removed, who represent governments all around the world; want their cut when you redeem miles for a free award. These taxes are pretty substantial in some countries and include security taxes, such as the 9/11 fee in the US.

Fuel Surcharges:

These are the most painful of them all. They can also be very substantial, especially for European airlines. These surcharges were created by airlines when oil prices spiked, as a way to offset the additional costs to fly people around. They have unfortunately not gone away even though the price of oil has become more reasonable. This is an important consideration to make when booking awards thru partners airlines. The airline you have miles on may not charge high fuel surcharges, but if you book an award ticket that involves partners (alliance or otherwise), the fuel surcharges are charged by the airline you will be actually flying on.

Booking fees:

Several airlines charge a booking fee to book award travel. Typically they charge this fee if the award travel is booked for a travel date that is within a certain threshold. This threshold may be 15 to 30 days or so.

Co-pays:

I would very much like to find the person who thought this one up and have him sit in an aircraft on a tarmac for 16 hours! I have not been able to figure out the reasoning behind this, except to act as a deterrent to redeeming miles for travel. A co-pay is a payment you have to make, along with the miles, to get a free award ticket. Now, the good news is that airlines typically do not charge a co-pay for a straight award ticket redemption. Those who do, charge co-pays for upgrade awards only.

Up-fare:

While on the topic of upgrade awards, let me talk about the fare buckets that determine the upgradability of a ticket. Airlines sell the same seats in an aircraft for different fares. These fares are classified into fare buckets (I will have a post on fare buckets soon, where I shall discuss this topic in more detail). Some of these fare buckets (the ultra cheap ones) cannot be upgraded. So, if you want to redeem miles for an upgrade award, if your ticket falls in a fare bucket that cannot be upgraded, you first need to ‘fare-up’. That is, pay the fare difference between your fare bucket and the next highest fare bucket that is upgradable. This hence, becomes like a co-pay for your upgrade. If your ticket was very cheap, this can be a pretty hefty amount.

Ways to get around or reduce the fees.

In reality, there aren’t many ways to get around the charges altogether. Here are a few suggestions:

Be an Elite:

While being an Elite will not eliminate the taxes and the fuel surcharges, it will eliminate or at least reduce any booking fees and co-pays.

Use a non airline associated loyalty program:

Programs such as Starwood Preferred Guest allow you to redeem points for airline tickets without any charges at all. In fact, airlines consider these to be revenue tickets and not award tickets. They even give you miles for these tickets!

So, keep these factors in mind when booking an award ticket. Do your due diligence before you book. I would like to point out here that none of these are ‘hidden charges’. The airline will disclose these to you before you redeem your miles and confirm the award. Just be ready to give out your credit card details along with your mileage account number.

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