Surcharges coming to the AE award ticket holdouts

Rumours are rampant that those carriers still not levying the fuel surcharge on AE award tickets will be joining the money-gouging club soon. So book 'em while you can!

 

No real surprise is it? But as another prominent member here would point out, you get such value...

 

If my wife can fly to Europe, Asia or OZ in J on IKK for around $1000 or so on points I still call that good value. Would I pay the miles they try and charge non status members plus the fees? Not a hope in hell;which is why I stay with AC and remain a SE and hopefully hit the 3mm milestone.

Airlines everywhere are making money again and they are going to reap as much benefit out of this market as they can. The bottom feeders will whine and moan but so are Republicans today. . Inflation is going to happen sooner than later, if it hasn't already started, so the cost of plane tickets today may look pretty cheap 5 years down the road.

 

Aeroplan is going to place surcharges on UA flights?
<as an example of an airline that does not have fuel surcharges (as of yet)>

 

I'll have to avoid UA flights, then! Oh, wait, I already do that ...

 

Its all in how you explain it. (disclaimer, I made this up, but it does make you feel all warm and fluffy)

We are pleased to announce an improved flight reward booking tool that augments the search capability and results visibility on both aeroplan.com and in Aeroplan's Contact Centre, optimizing Aeroplan's use of the Star Alliance network and providing its members with more route options, more destinations, more flexible flying times and fewer connections as well as standardizing ancillary charges that we collect for our partners. This will help our users standardize their costs across all carriers and make comparisons between carriers simpler and more efficient while reducing the amount of time required to find a cost efficient routing.

Or in English, since all flights will cost more, you'll spend less time looking for that cheaper routing without a fuel surcharge.

 

But it isn't just $1000. It is $1000 PLUS a ton of points. Those points aren't free.

At least in the USA tickets are still near inflation-adjusted all-time lows.

 

The points are free to me. My business pays for the tickets and thus the points I receive. I also have free points from CC's that can be moved into Aeroplan. Regardless, $1000 for a guaranteed J seat on a long haul flight is, IMHO pretty good. I too remember the days of totally free award flights but they seem passe now in most of the world excluding the US who now have the worst carriers and planes.
I cannot see the US airline industry continuing to lose money or not make enough to recapitalize themselves. Real inflation has started in other areas and will hit the US as economic recovery efforts take hold. With the printing presses pushing money out the door its only a matter of time

 

Well then we should all use that metric, right??

 

if it fits yes. How much do your points cost?

 

I get the vast majority of my miles/points through credit card spending, online shopping, etc. I'd do all of those things even if I didn't get miles. Even the majority of my travel would still take place if I didn't get any miles, so I don't view my FF miles or hotel points as costing me much, if anything.

 

There are those bottom feeders who think that is not enough. They want airlines to eat taxes that were not there years ago and fuel costs that almost make them lose money.
They prefer airlines to bleed red ink while they game the system, "legally" of course;ethically, not so much

 

Taxes should be paid as incurred. Suggesting that all fuel costs should be borne by the award redemption in addition to the points is ludicrous. And the part where the YQ fees don't actually reflect the fuel costs makes it even more silly.

And you might want to lay off the name calling.

 

Bottom feeder is a category of FF'er not name calling
Calling someone pompous would be name calling and sarcsam can be pompous. Its all in the sensitivity index one carries around on their shoulders.

Taxes are incurred in the case of AC and Aeroplan; they are at arms length as Companies whereby AE actually buys tickets from AC, and other airlines, and acts as their reward plan coordinator for managing their tier program statistics, selling them the points earned by each customer. They also charge other merchants using aeroplan for using the system In Canada that incurs taxes on every transaction (which is why Canada is not facing a fiscal cliff). I might agree somewhat that fuel costs are overdone but then again in the original scheme of things reward seats were given in an era of much lower cost travel overall as well as much lower fuel costs. I'm not sure what your formula is for airlines to make money but the profitable ones have finally learned that giving their seats away eats heavily at their profits.
Paid flying is going up, dramatically with some carriers, in most parts of the world except, it seems, in the US where your government prefers to print money instead of being disciplined about its economic status. That day of cheap flying is soon to come to an airline near you.

You never answered the question about how much it costs you to acquire those points.

 

Thank you for the explanation which didn't actually offer any new information.

Unless we are to believe that the "fuel surcharge" is the only aspect of the amount paid which covers fuel then the numbers are ludicrous. And if it is just a surcharge then shouldn't it only cover the short-term difference between the "regular" price and an unexpected spike? Indeed, from when the carriers started to add such surcharges (meaning at some point the actual fare used to include the full cost of the fuel) the actual fuel prices aren't that much higher. And it certainly isn't a short-term thing.

Charging a YQ is a way to screw corporate customers as fees are not discounted in most contracts. Charging it on award reservations is just a way to extend that screwing to other passengers as well.

Ny points are all earned based on my own spend and travel; I don't have someone else funding my adventures.

 

We are not in disagreement on fuel surcharges. However, in other transporation industries like trucking, fule surcharges are very much part of the equation on deliveries of good.

In Canada charging YQ is deductible by the Corporation because it is mostly a value added tax which is the most sensible tax there is. VAT is not deductible on personal purchases which is why the tax is so useful. VAT essentially helps lower income taxes so it is really not a "screwing" as you suggest. Unfortunately you live in a Country that has a very dysfunctional tax system but that is no reason lash out at the airlines. The guilty parties are those whom you elect to govern you.

Your travel being all leisure, you obviously chosen to pay up, but I do assume you earn money somewhere that allows you the privilege of that travel. But again, I don't see why the airline industry should subsidize your travel as you suggest they should. The points you get from your paid travel subsidizes future trips and you should treat those points as future discounts not gifts. Nothing in life is free in reality.

.

 

I'm not suggesting that anyone subsidize my travel. I'm suggesting that the amount charged accurately reflect what the company claims it to be. The concept of whether the YQ is deductible or not is irrelevant to the discussion. If I'm paying for a ticket which is $1000 then, at the end of the day I don't care what portion of that is fee, taxes or fare.

Now let's assume two scenarios for a corporate customer In one scenario the base fare is $900 with taxes/fees of $100; the other has a base fare of $500 with taxes/fees of $500. If I have a 25% negotiated discount then I'm either paying $775 or $875. By shifting the cost into a "fee" the carrier is effectively charging more for the exact same product under the exact same negotiated contract. Is that fair?

Then again, since all your travel is wholly paid for - not just subsidized - I'm not sure where you get off telling me what I do or do not deserve for free.

 

In my view, if a carrier is not making enough from the redemption reward points to cover the cost of travel, they should raise then either number of points required for the redemption or raise the cost of acquiring the point and not by imposing a high YQ fuel/carrier administration surcharge.......

After all, the reward points are money in its own way..... there is a monetary value to it...... 3rd party organizations pay Aeroplan to purchase such miles to reward its customers

 

1. The airlines are not price regulated. if you don't like what one charges use one that charges you fairly. last time I looked the airlines are free to sell their services at whatever price the market will bear. The consumer can either buy or go elsewhere. if that consumer and millions more go elsewhere then the airline will get a serious wake up call. that desn't appear to be happening to AC or any of the US airlines so far.

2. While I might agree wit the surcharge "fee" being unequal, point number one prevails and large corporate customers can decide if thye wan to pay that fee or not. the differences are not nearly so pronounced as you allude so the the discount loss is probaly quite a bit less and maybe offset by other means in a contract with the corporation.

3. I can tell you whatever I want in terms of our discussion; you either like it or not. Free choice.
My travel is wholly paid for because it makes money for the companies I do work for. I often travel on my own time and very frequently spend time away from home. So, in some respects the points are "payment" for my inconveniences while travelling. You, on the other hand travel on your own time so thus must not inconvenience anyone and you have a choice about where and whom you travel with in terms of airlines. I still think you beleive the airlines owe you some sort of "special" deal because you travel with them on your dime so in effect they should subsidize you with perks that cost more than the revenue you generate for them. if every airline shut down their FF programs tomorrow or within the legal notice period how would you handle that. They have that right.

 

Most carriers have raised the point thresholds required to get a reward and in effect have raised the cost of acquiring the points by making you spend more of them to get a reward seat.

Again, in the case of AC/AE; AE is an arms length company from AC and acts as a huge travel agent spending hundreds of millions each year to buy those tickets they 'give" out as rewards.

Further, reward miles are a depreciating asset as they earn no interest and are subject to some inflation in using them as we've seen recently.

 

But the points required are not reflective of the true costs of redemption............. Take a look at Asian carriers, they require way more just to redeem the same stuff as North American carriers........

Sure they raised a little last year, but they can raise more to cover the "additional costs" as opposed to charging YQ. Like you said, AE buys those tickets from AC...... they can raise the points required to cover the cost.

With regards to "reward miles are a depreciating asset as they earn no interest" not sure where you get this idea from....... Last heard from others that its a large revenue generator...... and i highly doubt the money sits there and does nothing until people redeem........ I will let a financially savvy person to address this

 

They are a depreciating asset for the consumer. As the price to use them goes up holding onto points for too long costs more when eventually used.

 

that is why the expiration dates are imposed.... Besides, they can choose lower redemption options.....like a toaster

 

Not really. The miles sit on AE's balance sheet as a liability until used. In fact the original business model for AE when they separated from AC was that profits would be made from unused miles. That generated the need to put a sunset clause on long unused miles. Since then AE has refined that model to what you have today.

 

once again, i'm not an expert in this....but i shall let someone else with a financial background and insight to answer this question...........