Airline surcharges on reward seats threatening to diminish value of frequent flyer points and miles

Are mysterious ‘carrier charges’ levied on reward seats diminishing the value of airline loyalty programs?

Frequent flyer experts have raised concerns about increasing charges imposed by airlines on reward seats, which are almost negating the benefit of paying the fare in points.

Although some of the charges are legitimate, representing airport fees and government travel taxes, so-called “carrier charges” go directly to the airline.

Airlines vary widely on the charges, with Emirates largely recognised as levying the highest fees on reward seats – up to $2000 one way.

Adele Eliseo of the Champagne Mile said Qantas frequent flyers would use 159,000 points for a business class seat on an Emirates-operated flight to London, plus a co-payment of $1986.56.

She said the return journey would cost even more because of the British air passenger duty of $386 imposed on premium class travellers. “In total, passengers would likely pay around $4500 AUD plus 318,000 points for a return trip booked with Qantas frequent flyer points and operated by Emirates,” she said.

“While it’s positive to find a long-haul business class redemption available with Qantas points, this redemption is likely out of reach for many due to the exorbitant carrier fee.”

Adele Eliseo was shocked to see the co-payment required for a reward seat booking with Emirates, via Qantas Classic Rewards.

Australian Frequent Flyer editor Matt Graham said the charges imposed by some airlines on reward seats diminished the value of points and miles redemptions.

He said a case in point was an economy seat from London to New York return on British Airways, which cost 49,000 Qantas frequent flyer points plus $847 in carrier charges and taxes.

“Instead of using frequent flyer points, you could simply buy a return economy ticket on the same flights directly from British Airways for $761,” Mr Graham said.

An Australian traveller, who did not want to be named, had a similar experience when booking a flight through Singapore Airlines’ site from Milan to Frankfurt return.

He was dismayed to learn the “benefit” of using 28,000 Kris­Flyer miles for the economy seats, would amount to just €18 or $30.

That was due to the fact the fees and charges imposed by Singapore Airlines amounted to $282.41 (€170.33), when the airfare in total cost $312 (€188.33).

“The effect of the surcharge is simply a hidden dollar penalty by Singapore that has nothing to do with government fees and airport charges actually born by the airline doing the flying,” said the concerned traveller.

“This really does seem out of character for Singapore, an airline (with) an excellent reputation.”

Steve Hui of iflyflat.com.au said the Singapore Airlines’ example showed why booking economy seats may not necessarily be the best use of points or miles. He said the taxes and charges imposed by airlines were often similar for economy and business class, with a few exceptions.

“Emirates are undoubtedly the highest – you’re looking at about $4000 return in surcharges; Qatar and Cathay Pacific charge about $1500 in ticket taxes on return flights, and Singapore Airlines is the lowest to Europe at about $650 to $680 return,” Mr Hui said.

Qantas charges varied, depending on the route and cabin class, but were typically around $450 for a return international economy flight and $700 for business class.

Singapore Airlines levies some of the lowest carrier charges on reward flights from Australia.

Mr Graham said savvy frequent flyers could largely avoid such charges by using airlines and frequent flyer programs that did not impose them.

“For example you don’t pay carrier charges when redeeming Qantas points to fly Fiji Airways or LATAM Airlines, or when using Velocity points to fly United or Air Canada,” said Mr Graham.

“In addition some overseas loyalty programs like Air Canada Aeroplan don’t levy carrier charges at all on any reward flight redemptions, including on partner airlines.”

From Tuesday, flights booked with Virgin Australia Velocity points on partner Singapore Airlines will incur higher taxes and carrier charges of around $200 for a business class reward seat, up from $150.

Ms Eliseo said Velocity gave members sufficient notice of the modest increase, which wasn’t always the case with airlines. Mr Graham said more transparency was needed. “It would be less of an issue if frequent flyers understood why those fees were being imposed and what for,” he said.

Originally published as Airline surcharges on reward seats threatening to diminish value of frequent flyer points and miles