Fare value for points?

Do­mes­tic flights best route to sav­ings, OBJ colum­nist says

Ottawa Business Journal - - Front Page - Michael Pren­tice is the OBJ’s colum­nist on re­tail and con­sumer is­sues. He can be con­tacted at news@obj.ca.

Air­line loy­alty pro­grams not nec­es­sar­ily the way to go if you’re plan­ning a trip to Europe, Michael Pren­tice writes.

Itried to cash in my Aero­plan points re­cently for a round-trip flight from Ot­tawa to London, Eng­land – only to dis­cover that I would be charged almost $700 in taxes, fees and fuel sur­charge.

I had imag­ined the flight was go­ing to cost per­haps $300 to $400 tops, in­clud­ing all those ir­ri­tat­ing items that air­lines (and air­ports and gov­ern­ments) add to the price of a ticket.

What’s go­ing on here? Is it worth the bother any longer to join loy­alty pro­grams such as Aero­plan and Air Miles? You can spend years col­lect­ing enough points for what you imag­ined would be low-cost air travel, only to be dis­ap­pointed.

But do not give up on th­ese loy­alty pro­grams. You just have to be very se­lec­tive in when and how you re­deem to make the most of your ac­cu­mu­la­tion of loy­alty points.

For a start, it’s not a ques­tion of which is bet­ter – Aero­plan, Air Miles or any of a mul­ti­tude of such loy­alty pro­grams that try to lure us to give them our business. Col­lect loy­alty points where you wish, but never, ever shop or do business some­where just be­cause it of­fers a few measly loy­alty points. Shop where you get the best price and value. The same goes when cash­ing in loy­alty points.

I’ve had sev­eral low-cost flights us­ing Aero­plan points or Air Miles, as well as through the loy­alty pro­gram of U.S. car­rier Delta Air­lines.

I al­ways knew I had to be care­ful how I used my points. But I was stag­gered to dis­cover how much dif­fer­ence it can make.

When plan­ning a leisure trip to Eng­land this win­ter, I de­cided first to check whether I had suf­fi­cient Aero­plan points to en­able me to fly non-stop be­tween Ot­tawa and Heathrow with Air Canada.

“Have I got a deal for you!” – or words to that ef­fect – said an Aero­plan tick­et­ing agent, when I in­quired by tele­phone how many points were re­quired.

Aero­plan had a sale on flights to Europe, the tick­et­ing agent told me, and a trip would only re­quire about half the usual num­ber of Aero­plan points.

But on top of the 31,600 Aero­plan points re­quired, there were taxes, fees and sur­charges of $693. Bri­tish land­ing fees are no­to­ri­ously ex­pen­sive. But by far the largest item was a fuel sur­charge of $432 im­posed by Air Canada!

I don’t know why the agent seemed so sur­prised when I said I’d keep my Aero­plan points for later use.

Then I called my travel agent and paid a to­tal of $991 for a round-trip flight to London. Sure enough, the ticket price in­cluded $693 in taxes, fees and air­line-im­posed sur­charges. Ac­cord­ing to Air Canada, the base price of the ticket was $298.

Does it re­ally cost Air Canada $432 in fuel costs to fly each pas­sen­ger to and from London?

On Oct. 21, the Globe and Mail re­ported the bench­mark Gulf Coast jet fuel price was about $2.40 US per gal­lon – about $2.70 Cdn.

Ac­cord­ing to Boe­ing’s web­site, it takes about 45 gal­lons of fuel per pas­sen­ger to fly from New York to London on a Boe­ing 767-400ER air­craft.

The flight dis­tance from Ot­tawa to London is about 5,360 km, slightly less than the length of a flight from New York to Heathrow. As­sum­ing sim­i­lar fuel con­sump­tion of 45 gal­lons per pas­sen­ger on an Ot­tawa-London flight, it would cost about $120 in fuel per pas­sen­ger to fly a 767 on that route based on the Oct. 21 bench­mark price.

While it’s hard to know Air Canada’s ex­act fuel costs, the $432 fig­ure ap­pears to be way too high.

What we do know is that “taxes, fees and sur­charges” are much lower for travel within North Amer­ica than for travel to Europe. The fuel cost is built into the base price of the ticket.

For ex­am­ple, I checked Air Canada’s round-trip, econ­omy-class fare from Ot­tawa to Van­cou­ver for the same pe­riod that I’m plan­ning to visit Eng­land. The all-in­clu­sive fare to and from Van­cou­ver was $808 – not a lot less than the $991 I’m pay­ing to fly to London.

The big dif­fer­ence when fly­ing to Van­cou­ver is in the cost of taxes, fees and sur­charges, which only amounted to $149.

I asked Aero­plan spokesper­son Christa Poole why fuel costs are in­cluded in the base price of a ticket in North Amer­ica, but not in some flights to Europe.

This was her writ­ten re­sponse: “Each mar­ket is dif­fer­ent and air­lines adapt their pric­ing struc­ture ac­cord­ingly. The dif­fer­ences be­tween mar­kets are mostly driven by the com­pet­i­tive na­ture of pric­ing in the air­line in­dus­try, where air­lines have to match what their com­peti­tors are of­fer­ing in or­der to at­tract book­ings.”

My ad­vice is this: Never, ever use your loy­alty points for air travel with­out first check­ing how much it would cost to travel on the same itin­er­ary on the same dates as an econ­omy-class, fare-pay­ing pas­sen­ger.

From this econ­omy-class fare, deduct the amount you would have to pay in taxes, fees and sur­charges if you flew on loy­alty points. The re­main­ing sum – $298 in the case of my Air Canada flight to Eng­land – is what your loy­alty points are buy­ing.

I found that Air Miles, just like Aero­plan, of­fers much bet­ter value when loy­alty points are used for flights within North Amer­ica than for a trip such as mine to Europe. In some cases, your points, whether Aero­plan Miles or Air Miles, can earn twice as much for a flight within North Amer­ica as for a flight to Europe.

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