Opinion: Landing a good deal with airfare loyalty points

I tried 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 would appear to be rather 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.

Michael Prentice is the OBJ’s columnist on retail and consumer issues. He can be contacted at news@obj.ca.