When redeeming frequent flyer points, carrier charges (also known as fuel surcharges) can add hundreds or even thousands of dollars to the cost of reward flights. But not all airlines charge them, and for those that do, the amount of carrier charges paid can vary significantly depending on where you start your trip.
There are two components of the “taxes & charges” co-payment when redeeming points for a flight. The taxes are made up of legitimate third-party fees and taxes which are charged by governments and airports. These apply to all airfares sold and do not go to the airline. But the “carrier charge” component goes directly to the operating airline and is essentially just an arbitrary fee.
You can’t generally avoid paying third-party taxes (except on Japanese domestic flights!), but you can avoid paying airline-imposed carrier charges by redeeming points to fly with airlines that don’t have them. For example, if you use Qantas points to fly with certain partner airlines such as Fiji Airways, Alaska Airlines or LATAM Airlines, there are no carrier charges payable.
The airline that you choose to fly is not the only thing that determines how much you’ll pay. Your ticket’s “Point Of Origin” (an airline industry term with an unfortunate acronym) also plays a role.
What is a Point Of Origin?
The Point of Origin on an airline ticket is the place where the first flight on your itinerary departs from.
For example, if you booked a round-trip ticket from Sydney to Tokyo and back, your ticket’s Point Of Origin would be Sydney, Australia. But if you booked a return ticket from Tokyo to Sydney, your Point of Origin is Tokyo, Japan.
The same concept applies to multi-city and round-the-world tickets, where the Point Of Origin is simply wherever the first sector on the itinerary departs from.
Why does this matter?
An airline ticket’s Point Of Origin, as well as the Point Of Sale (the country where the ticket is purchased) can have a few implications.
The obvious one is the currency that your booking is charged in. If the Point of Sale on your ticket is Australia (as is generally the case for bookings with a Point Of Origin in Australia), you’ll usually be charged in Australian dollars. Likewise, if you’re booking from another country, the fare is usually charged in that country’s local currency.
The Point Of Origin or Point Of Sale on your ticket can also affect the availability of fares in each RBD (fare class), as well as the price.
Airfares are filed differently in different markets
Airlines file airfares in different markets with different pricing and conditions. This often works to the disadvantage of people in Australia because base fares on itineraries departing Australia are typically higher than fares from other countries to Australia.
Trans-Atlantic fares booked from the United States to Europe are also often more expensive than equivalent round-trip airfares from Europe to the United States.
Here’s an example of a return Business Class airfare from Rome to New York with ITA Airways (this would be charged in Euros but we’ve converted the price shown below to AUD to make the comparison easier):
And this is an equivalent return Business airfare in the opposite direction – from New York to Rome – in exactly the same booking class (again, the price shown is in AUD):
Even in Economy Class, ITA Airways is charging almost $200 less for a round-trip ticket from Rome to New York in the same fare class than the other way around.
This concept doesn’t just affect commercial airfares. There can be a huge difference between the carrier charges applied to reward bookings made in different markets – even though the same flights are used!
Carrier charges on Japan Airlines international flights
While taxes and carrier charges are generally not payable on Japan Airlines domestic flights, they are applicable on Japan Airlines international flights. But the amount varies enormously, depending on where you start your trip.
The exact amount of Japan Airlines carrier charges depends on your ticket’s Point Of Origin and may be significantly higher on international itineraries originating in Japan, compared to trips originating in Australia or other countries.
For example, if you redeemed Qantas points for a return Japan Airlines Premium Economy ticket from Sydney to Tokyo, you’d pay a total of $177.54 in taxes & carrier charges. This includes just $11.40 worth of carrier charges.
The same Qantas Classic Flight Reward booked in the opposite direction, flying Japan Airlines Premium Economy return from Tokyo to Sydney, attracts a whopping JPY141,600 (~AU$1,500) in taxes and charges. This includes a carrier charge component of JPY131,000 (~AU$1,387). Crazy!
British Airways trans-Atlantic carrier charges
As another example, British Airways’ carrier charge on a one-way Business Class reward ticket from New York to London is a whopping USD850 (~AU$1,268) per passenger.
But if you book a one-way British Airways flight using Qantas points from London to New York, the carrier charge component drops to GBP275 (~AU$485). The third-party taxes are much higher, though, due to the UK Air Passenger Duty.
The British Airways carrier charges on the New York-London route are again different, though, if the Point Of Origin on your ticket is in Australia. For example, if you booked a Sydney-New York flight as the first sector on a multi-city itinerary that also included New York-London, the Point Of Origin would be Australia and the carrier charges payable to British Airways for the trans-Atlantic sector would reduce accordingly.
In the example shown below, the carrier charges for the Qantas flight are $75. The carrier charges applicable for BA178 are therefore $322.60 (in Australian dollars). That’s a saving of almost $1,000, compared to the carrier charge applied on a New York-London ticket originating in the USA!
A lot more goes into airline pricing than first meets the eye…
You can leave a comment or discuss this topic on the Australian Frequent Flyer forum.
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