Peter Greenberg: Taxes on Frequent Flyer Miles

By: Peter Greenberg | Source: AARP.org | 2008-07-01

Having not redeemed Aeroplan (Air Canada) miles in the past four years, I was shocked recently to have $130 charged for taxes on a short-haul ticket. Plus, of course, a $30 fee for booking over the phone, as I refuse to give my credit card over the Internet. My 15,000 miles are certainly not for a free ticket. Is this standard procedure for most airlines, and is there any way around this?
Heartfelt thanks from a huge fan,
Paula, Montreal

Dear Paula,  
Welcome to the wonderful world of frequent–flier-miles redemption. I'm sorry to say that your experience is all too common these days. With nearly all frequent flier tickets that you “purchase,” you will be required to pay taxes on them--both in the United States and Canada.  

I might point out that if you hadn't used miles in four years, you should probably consider yourself lucky that Air Canada didn't junk them. With most United States airlines, with 12-24 months of non-use, your miles go bye-bye. And you were able to get tickets for 15,000 miles, which is pretty good, considering Air Canada has actually spun off Aeroplan, its frequent flier program. That said, I haven’t heard of anyone having any more problems using Aeroplan than other American frequent flier programs.   

But to answer your question directly, yes, generally speaking, this is standard procedure for the airlines to have you pay taxes on these “free” tickets. And if you're buying tickets on an airline that charges extra fees, such as booking fees and fuel surcharges, you'll often be responsible for those as well.