Aeroplan Cardholders Can Now Use Points to Cover Surcharges, But Is It Worth It?

Posted May 9, 2016 - updated May 13, 2016 by cccadmin in

Air Canada Boeing 767-300

Ever since acquiring the rights to issue Aeroplan cards, TD Bank has done an excellent job in addressing cardholder complaints. Last year we wrote about a number of significant improvements TD Bank introduced for its popular travel rewards program. Among the improvements, fixed and classic plus were introduced, making it easier to book flights, and tiers were added to its membership.

While those were steps in the right direction and applauded by cardholders, a major annoyance still remained: taxes and fuel surcharges. An Aeroplan cardholder faced $2,200 in fees and taxes for a so-called free flight. He’s not alone. In fact, for some cardholders, the fees and taxes add up to more than the flight.

To address this, Aeroplan isn’t doing away with those pesky fees, but they are letting you redeem your Aeroplan miles for them instead of paying cash. Hooray! While that may sound good on paper, is it worth it? Let’s take a closer look.

Say Goodbye to Taxes and Fuel Surcharges

As mentioned, Aeroplan cardholders now have the option of redeeming points to cover taxes and fuel surcharges, letting cardholders truly enjoy a free flight. While this should be welcomed news, not everyone is jumping for joy at the prospect of flying cash-free. Here’s why: for flights with costly fees, the additional points needed to cover the fees can be more than the actual flight.

In this article, CBC gives us a couple of examples to show how costly it can be to use points to cover airline fees. To fly from Vancouver to London, England in July, it would cost 39,000 reward point for a return flight. But what about those pesky fees? To cover $592.91 in fees, you’d need to redeem 69,754 points. That’s roughly 30,000 more points than the flight! (If that isn’t point gouging, I don’t know what is.)

While Aeroplan customers may have the option of redeeming points for taxes and fuel surcharges, the jury’s still out on whether it’s a good deal. Cardholders haven’t been shy about voicing their displeasure about the number of points needed, calling them “outrageous.”

It’s About the Numbers

When we do the math, it’s hard to disagree. When redeeming points for flights, Aeroplan cardholders get at least 1.5 cents per point, but when redeeming them for fees, cardholders only get 0.85 cents. If you’re looking to get the biggest bang for your travel reward points, clearly using them to cover taxes and fuel surcharges isn’t the best use.

Nevertheless, for big spenders with more points than they know what to do with, redeeming points to cover taxes and surcharges may be the way to go. Although we don’t have any specific numbers, Aeroplan says the new option of redeeming points for taxes and surcharges is proving popular with cardholders.

Current Aeroplan credit card offers are enticing. For example, the TD Aeroplan Visa Infinite card offers up to 30,000 bonus points for keeping the account active for the first 3 months of cardmembership. Plus the $120 annual fee is waived for the first year. Perhaps using the bonus points towards the taxes and fees, even with the reduced point value, makes sense for many users.

The Bottom Line

While Aeroplan cardholders can now enjoy a truly free flight, it’s still up for debate on whether it’s a good use of points. If you don’t mind paying taxes and fuel surcharges, it still makes sense to pay them yourself. That being said, if you don’t have the extra cash and want to travel now, redeeming points is the best way to go.

Photo credit: Aero Icarus via flickr