Understanding Taxes and Fees on Award Bookings

Disclosure: Well Traveled Mile has partnered with CardRatings for our coverage of credit card products. Well Traveled Mile and CardRatings may receive a commission from card issuers.

You know that feeling of excitement from booking a free flight with your rewards points to finally go on that trip abroad you have been planning for months until suddenly you are hit with $600 (or more) in fees and taxes on your “free” flight? Some award bookings are not so free anymore. On a recent trip I was planning to Portugal I was baffled to see the $1200 I was being asked to pay in taxes and fees, so I thought it would be interesting to explain fees and taxes on award bookings.

Why these fees exist:

Airlines are trying to squeeze extra revenue from award passengers who have been flying for free or paying less, so now they are adding fees onto rewards tickets. Taxes are added to keep the airport in order from airport security to airport maintenance. Those rewards tickets now comprise of fuel surcharges, government taxes and fees. The taxes found on your airfare are a fixed amount that you cannot get around and must be paid for with the purchase of a “free” flight. Some common awards tickets fees that are imposed by the airline, can be a fee to modify an itinerary, cancel a flight or fuel surcharge.

All airline do not impose extra fees on award tickets:

It’s not all airlines nor is it true for every country of departure. Understanding the taxes is the best way to avoid them and take advantage of those hard-earned miles. Domestic flights within the US do not charge much for booking with rewards, just the couple of dollars for the September 11 Security Fee. Certain international flights do charge a significant amount on rewards tickets and the more elite your seating is, expect it to be higher.

Taxes and fees on booking awards flights for different airlines:

British Airways, Air Canada, Lufthansa, Virgin Atlantic and All Nippon Airways charge passengers that redeem their flyer miles for flights especially if flying out of the UK. London has tacked on an Air Passenger Duty fee for flights departing on flights of 6,000 miles or more which costs about $210 for passengers with premium seating.

The Air Passenger Duty fee is unavoidable if flying out of London, however passengers who connect through London pay a Passenger Service Charge for $54, but not the $210. A stay of less than 24 hours in the UK is considered a connecting flight.

How to minimize fees and taxes:

A way to avoid an Air Passenger Duty tax is by departing from a country that does not impose such a fee such as France. If you cannot help but to travel out of a country which requires departure tax imposed by the government, then there are other ways to bring down the cost. Travel with an airline partner that does not charge its awards passengers for fuel surcharges. Fuel surcharges make up a significant amount of what airfares are composed of. Not all airlines charge their awards passengers this fee, but when they do it tends to affect more international bound flights.

Airlines that currently do not include a fuel surcharge for awards flights:

South African
Alaska Airlines
Eurobonus AS
Delta (flights which originate from the US or Asia)
American Airlines (all partners except British Airways and Iberia)

You should never pay a higher fuel surcharge than a paid ticket holder would for the same flight. To get an estimate of how much you should anticipate spending on your rewards fare, refer to ITA Software which breaks down the entire cost of your fare and taxes.

Other fees that are included in the charge are the 9/11 Security Fees, Immigration Fees and International Departure Fees, but these fees are all minimal.

Reserving your ticket in advance is the best way to avoid close-in booking fees. Close-in booking are added when tickets are purchased last-minute or within 21 days of the flight and is typically $50 to $150. The fee increases depending on how close to the departure flight the reservation is made.

There are other fees that could make your trip cost more depending on where you are visiting, but not necessarily included in your airfare or rewards bookings. Travelers to some South American countries may have to pay a reciprocity fee before entering the country. Another good resource for information is our earlier post about other airline fees and how to avoid them.

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Advertiser Disclosure: Well Traveled Mile has partnered with CardRatings for our coverage of credit card products. Well Traveled Mile and CardRatings may receive a commission from card issuers.

Editors Note: Opinions expressed here are author’s alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.
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