How to save on 'free' airline tickets
As airfares rise, airlines are also raising their fees for booking awards tickets. Here's how to avoid overpaying.
This post comes from Kelli B. Grant at partner site SmartMoney.
Frequent fliers expect to pay a little in taxes and fees to get an awards seat. But the price tag for free seats has been steadily climbing. Last year, United upped its maximum fees for booking awards tickets from $500 to $600 each way on international routes. Earlier this year, Spirit added fees of $15 to $100 for booking awards seats close to the date of departure -- and by their definition, that extends as far as six months out.
Rising taxes and fuel surcharges can add hundreds more to the cost. In April, the United Kingdom increased its minimum air passenger duty for flights of more than 6,000 miles from roughly $134 to $146. Passengers in premium classes might pay as much as $291. "The old notion of a free ticket is pretty much long gone," says Tim Winship, a SmarterTravel.com contributing editor.
The only upside to these pricier free seats is that there are more of them. Awards seat availability rose 7% compared with last year, according to e-commerce platform Switchfly and consulting company IdeaWorks. Award seats were available 93.5% of the time on six low-fare carriers, and on 62.9% of requests for the other 17 surveyed.
Having more seats keeps loyal fliers happy and reduces the carriers' tally of miles earned but not redeemed, which shows up as a liability on their balance sheets, experts say. And its one more way to tack on fee revenue, says Brian Kelly, the founder of deal site ThePointsGuy.com. "Airlines have been aggressively monetizing frequent-flier programs," he says.
To be sure, awards tickets are generally still cheaper than booking outright: Airfares are already up 4% compared with last year, according to BestFares.com. But experts say there are ways consumers can further reduce costs to take advantage of awards seat availability.
As with airfares, choosing off-peak days and times often is a way to lower mileage rates, Winship says. Travelers may be able to shave off a few thousand miles, especially in programs like Southwest's, which bases the total number of miles needed on current fares.
U.S. Airways' designated "off-peak" rates for flights between North America and Europe cost 35,000 miles, compared with 60,000 for the next-highest tier. (This year, that meant traveling between Jan. 15 and Feb. 28.) The 25,000 saved is enough for a free round-trip domestic fare.
Compare booking costs
Most airlines now allow travelers to book their award tickets online, says Jay Sorensen, the president of IdeaWorks. That's a fast way to avoid the $15 to $30 fee many charge for booking by phone. But it's worth a phone call to customer service anyway, Kelly says. Customer service reps often have access to more awards seats, which could result in using fewer miles. (Post continues below.)
Experts typically consider miles valuable at a penny or more each; at that rate, if a rep can shave at least 3,000 miles off the award ticket cost, the $30 fee is well worth it -- and the savings are often bigger, he says. (In the IdeaWorks survey, for example, online reward prices for a round-trip Delta ticket ranged from 25,000 to 40,000 miles, potentially saving 15,000.) And reps may also be willing to waive the phone fee if you're nice, Kelly says.
Fly with a partner airline
Travelers can often avoid fuel surcharges by booking their awards ticket with a favorite carrier's partners instead of that carrier itself, says Winship.
For example, British Airways charges fuel surcharges on awards tickets; partner American Airlines doesn't. On an August round-trip flight between New York and London, that amounts to $438 saved. (The tip is also worth considering for travelers earning generic miles on a travel rewards credit card, he says.)
Crunch the numbers for smaller surcharges. Airlines don't always put partner routes in their online reward booking engines, which forces you to book by phone, at a cost of up to $30. Some also tack on an extra $25 processing fee for using miles for a free seat on a partner airline.
Use a miles-earning credit cardAirline bonuses are up 20% from last year, with sign-on bonuses for new cardholders averaging 60,000 miles, according to CardHub.com. That should be enough to cover two round-trip domestic seats at the lowest redemption level, or one at a higher tier. A few, like the American Express Platinum, even offer a $200 credit toward airline fees, covering the processing fees to book that awards ticket, Kelly says.
But card costs such as annual fees and interest can add to the price, making them less worth it for infrequent travelers and cardholders who carry a balance. That Amex, for example, costs $450 a year.
Book earlyAirlines often assess a "close-in" processing fee for booking rewards travel within a few weeks of departure, Winship says. The rates vary by airline and timing.
American, for example, tacks on a $50 charge at the 20-day mark, and doubles that to $100 for travelers booking six days or fewer out from departure. U.S. Airways charges a flat $75 for tickets booked within 21 days. Some carriers also waive the fees for elite frequent fliers.
That said, it's worth checking for awards seats even at the last minute, Sorensen says. Airlines often open up seats at the cheapest redemption levels with just weeks to go, even as regular fare prices rise. The last-minute booking fee is cheap in comparison, he says.
If you want a first- or business-class seat, it's usually better to pay for the whole ticket with miles rather than buy a coach seat and use miles to upgrade, Kelly says. That's because most airlines now assess "co-pays" to use miles in that way, which can add hundreds of dollars to the cost.
Depending on the fare type, a United traveler heading from the U.S. mainland to Hawaii might need 10,000 to 30,000 miles to upgrade his ticket on one leg, plus a fee of $125 to $500. A one-way awards first-class award ticket, in comparison, starts at 40,000 miles. Upgrades may not be guaranteed, either, he says.
Not enough miles? Buying them is generally a bad deal, but if you're just a few thousand miles short for an upgraded awards ticket, it may still be cheaper than a paid upgrade, Kelly says.
More from SmartMoney and MSN Money:
MORE ON MSN MONEY
VIDEO ON MSN MONEY
They failed to mention anything about Southwest??? I have there frequent flier points and they are easily redeemed except for the "9/11 Fee" of $10 dollars per way. Not sure why they have to blatently call it a 9/11 fee but thats another topic. Most Airlines suck these days at least with Southwest you know in advanced what you will get unless your a typical superlarge american then you may be asked to buy two tickets or leave the plane.
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
Even those who don't like to shop are probably hitting the stores this month. Here's what to be on the lookout for and here's what to avoid.