Aeroplan: New transportation tax for flights to/from the U.S.

This comment from a member of our Facebook community raised the question of where these “US Tax Recovery Fees” come from when booking a flight with Aeroplan points in the US.

So we asked Aeroplan directly.

We were informed that this tax was associated with a specific transportation tax in the U.S., and that it was previously absorbed by the Aeroplan points required to make the reservation. Aeroplan and Air Canada have recently changed the way they do business and this tax is now collected in cash when booking with points.

This new tax applies only to flights to and from the United States. Thus, bookings through the U.S. or on domestic flights within the U.S. will not be charged this tax.

Here is the exact answer from Aeroplan:

This is for us to recover a U.S. transportation tax which applies to all redemptions to and from the United States (but not within or through). Simply put, the amount we collect is what we remit to the U.S. tax authorities. Until recently due to IT limitations, we absorbed this tax into the cost of the rewards and remitted the taxes in cash behind the scenes. We’ve since implemented a change where the cost of the taxes that we remit has been removed from the cost of rewards and instead is represented with the other applicable fees and taxes.

Let’s take the example of a round trip to Orlando in January 2023. It would cost you 17,600 Aeroplan points and $136.98 in fees and taxes. This is the “Air Transportation Charges” portion that was previously included in Aeroplan points.

If you click on the “View Price Breakdown” option, you will find an explanation of these fees at the bottom of the box.

It appears to be a flat tax of $26.55 per flight, or $53.10 for a round trip, as demonstrated in this simulation of a January 2023 round trip to San Francisco.

Of course, you can choose the last payment option to pay for your reservation in full in Aeroplan points and not have to pay this tax in cash, but it is never the most advantageous if you look at the exchange rate.

As many in our community have noted, adding this tax mathematically decreases the value of Aeroplan points for flights to/from the U.S.

As Aeroplan explains, this tax was previously “absorbed” into the points cost, but now it is passed on to the Aeroplan member.

Here is the same flight from Montreal to Orlando in January 2023:

• On the left when paying in cash on the Air Canada website
• On the right when paying with Aeroplan points on the Air Canada website

If we calculate the value of Aeroplan points for this flight (Cash cost – taxes paid / number of Aeroplan points redeemed) :

($311.99 – $136.98) / 16,400 points = 1.07 cents per point

Before Aeroplan passed this tax on to the member, the valuation would have looked more like this:

($311.99 – $83.88) / 16,400 points = 1.39 cents per point

In other words, that’s a 23% decrease in Aeroplan point value for a flight to/from the U.S.

Aeroplan points reservations to and from the U.S. will now be subject to an additional fee of $26.55 one-way or $53.10 round-trip per person. The option to pay for everything with Aeroplan points is still available, but it is not the most advantageous. This tax does not apply outside the United States, or for flights that pass through the United States.

It is not a huge amount, but it can be significant when choosing a destination and when traveling with family, for example.

Remember: there is a technique to get a free bag when travelling on Air Canada for you and up to 8 travel companions (whether you travel with points or cash). This will reduce your flight bill, even after adding this tax!