Why Are There Taxes On Frequent Flyer Miles?

Why are “free” frequent flyer miles taxed, asks Katie.

    Why do passengers have to pay airport taxes & fees when we redeem frequent flier miles for a free air ticket, but we do not have to pay similar fees when we redeem hotel points for free stays? The math I learned was that zero multiplied by anything was zero, but somehow, the airlines don’t comprehend this concept. What gives??

We asked Mark Ashley of UpgradeTravel and he says:

    “Because some taxes are NOT charged as a percentage of the ticket, but as a flat fee, such as a $5 9/11 security fee. And international tickets have more taxes than domestic tickets. The question is, why are some fees “covered” by your miles, but others aren’t.

    Some airlines are more generous than others. Some pick up the tab on some international taxes, while others don’t. I don’t have hard data right now, but if I remember correctly, United and American charge less in taxes on free tickets than, say, KLM / Northwest. “

Katie also sent her question to the Department of Transportation, but somehow we were able to respond a bit faster. — BEN POPKEN


Edit Your Comment

  1. MacBenah says:

    WAIT a minute! “a $5 9/11 security fee”?
    WTF is that? Is that how airports pay the salaries of those half-blind perverts they call Security Screeners?

  2. Would you really expect new Labour to let a price go untaxed?

  3. lennys26 says:

    Well, I dunno what exactly we are paying for when we buy plane tickets anymore.

    With a Security Fee, Seat Fee, Fuel Fee, Departure and Landing Fee (Segment Tax), Ticketing Fee (sometimes) and Airport Charges, what exactly is the base price paying for???

    Oh, did I forget that they are beginning to charge for baggage as well?