There are two things in life that are inevitable: Death and Taxes. Rick and I talk a lot about “free” travel, and that’s how we really see it … except for the taxes (and fees). So yeah, there really is no “free” lunch but if you’re eating a steak and the bill comes in at less than what you’d pay for a hamburger you’re probably doing pretty good.
When it comes to hotel rooms, we typically don’t see taxes, but what occasionally pops up are “resort” or “convention” fees. While not a tax by a government entity, its a tax of sorts by a specific property. Frankly the only value these fees add are some ancillary revenue for the property and an easier way to manage those resources that you’re given access to. If Wi-Fi and health club access is free to everyone, then as a resort owner I don’t need to manage access / billing at all. But that said, for the most part, when you book an award night at a hotel (such as my mother who just came back from a girls weekend at the Marriott Marquis in New York), you get a folio at the end with a $0 total … unless of course you’ve charged that dinner to your room. (which if you ate at the hotel I hope you certainly did to get more points!)
Airlines, holy batman a completely set of rules. But lets be real here: look at the breakdown of an airline ticket. Government taxes, fees, airline fees, baggage fees, seat selection fees, boarding pass fees, bathroom fees (ok maybe not yet). Below is an example of a breakdown of a straightforward round-trip from New York to Shanghai, China … look at those fees!
- Here’s Delta’s explanation of how it all breaks down
- The base fare is $147 each way; so $294 to go to and from China … enter the taxes and fees
- US International Departure Tax – Ok, that’s Uncle Sam taking a cut when you leave
- DL YR Surcharge – This is Delta adding on a fuel surcharge of $358. Seems like a tricky way of getting around paying government taxes as this isn’t part of the fare, but rather a surcharge. Kind of like a baggage fee to a certain degree.
- US September 11th Security Fee – Ok, this pays for TSA
- US Passenger Facility Charge – You use an airport, you gotta pay to keep it up. That’s where this goes to
- USDA APHIS Fee – USDA / Agriculture & Animal Inspection (International only)
- US Immigration Fee – Gotta pay for those ICE and CBP officers
- US Customs Fee – Gotta pay to manage all the stuff we move between borders
- People’s Republic of China Airport Fee – Similar to Passenger Facility Charge
- US International Arrival Tax – Uncle Same taking a cut when you return
Now keep in mind, this doesn’t take into account that you need a Visa to get through immigration in Shanghai either
That was a regular ticket that anyone could purchase, however when you book an award ticket, the airlines frequent flier program dictates which part of that ticket your miles go towards and what you’re stuck with. Each program is different, and fees vary by destination! Expect to always see the September 11th Security Fee ($2.50)
Here’s two extreme examples (Here’s looking at you British Airways)
Detroit to New York on AA – 4500 miles
Next week a buddy and I are headed to Detroit to see the Lions play the Falcons. After the game I’m going to fly to New York to meet up with family for Christmas and New Years. American, United, and US Air all had low/saver space available; Delta not a seat unless I was willing to pay 2x the miles.
Knowing that British Airways and American Airlines are parters through the oneworld alliance I’m able to book AA flights with BA Avios. BA’s award chart is distance based … and at 502 miles (DTW to LGA) it is in the lowest bucket costing me only 4500 Avios (of which Sara and I have about 200k between us in a family account) + Taxes and Fees.
British Airways doesn’t charge taxes and fees on American’s flights so other than the 4,500 Avios I just at to pay the $2.50 9/11 Security fee. I don’t want to say this is a good redemption because it isn’t. In fact it is one of the absolute best in my opinion. A major strong suit of BA Avios are these short-hauls.
In fact, booking the equivalent flight with AA would still cost me $2.50; but it’d be 12,500 AAdvantage miles … No thank you very much!
On the flip side, a simple flight across the Atlantic, well that’s an entirely different story. Take a look at the following example. First we look at a economy class non-stop flight from Dallas to London (we happen to be in a super saver period so the miles are even less … but focus on the dollar cost not the miles) That’s right, $2.50 to get from Dallas to London + your miles on AA flight #50
Now, lets look at the same AA flight but booking with BA Avios … $252.70! It’s the same flight, but in addition to the $2.50, BA is adding a fuel surcharge.
Ok, one final example: A BA flight using AA miles … $252.70 again! AA won’t charge you the fuel surcharge using their miles if you’re flying on their aircraft, but if you’re on BA, you get the fees … even though you get the better mileage cost.
After those taxes and fees, there’s that last minute booking fee possibly. Book an award ticket within 21 days of departure you’re paying a service charge / premium with some airlines. Delta doesn’t have any, but United does (waived for their top 3 tier elites) As does American (waived for all elites)
Remember, the taxes and fees are based on the rules the program that you’re using the miles from has, not the carrier you’re flying. Keep in mind though, that rules of the program may inherit some from that carrier. Always check the program you’re looking to book with and do a test / speculative booking to see what taxes and fees come out to.
IHG® Rewards Club Select Credit Card
- Annual Fee: $49 fee waived for the first year
- Foreign Fees: No
- Card Type: Hotel
The IHG Rewards Club Visa is often cited as one of the most underrated hotel credit cards, with good reason. The official offer is for 70,000 points after $1,000 spent within three months, with the first year’s fee waived. The card comes with an annual free night certificate that can be used at any IHG property, including Intercontinental hotels - making this certificate worth upwards of 50,000 points. This is far more generous than some other hotel cards, which limit the categories in which free night certificates can be redeemed.
Cardholders earn 5 points per dollar at IHG hotels; 2 points per dollar at gas stations, grocery stores, and restaurants; 1 point per dollar everywhere else. Moreover, you’ll get a 10% rebate on award redemptions, up to 100,000 points per year. The card also comes with Platinum status, though that doesn’t get you much with IHG. Still, this is a fantastic card to have in your wallet, with benefits that far outweigh the already low $49 annual fee.
- Earn 70,000 bonus points after you spend $1,000 in the first 3 months of account opening
- Enjoy a free night of card membership at over 4,700 hotels worldwide
- Earn 5 points for each $1 spent at our hotels
- Earn 2 points per $1 spent on purchases at gas stations, grocery stores and restaurants
- Bonus points redeemable at hotels such as Intercontinental® Hotels & Resorts, Crowne Plaza® Hotels & Resorts and Holiday Inn®
- Automatic platinum elite status, as long as you remain a cardmember
- $0 introductory annual fee the first year, then $49