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Entries in Frequent Flier Miles (3)

Tuesday
May292012

Chicago 'Million Miler' Sues United Airlines for Taking Away Perks

United Continental Holdings(CHICAGO) -- A Chicago man who has accumulated more than a million miles in United Airlines' frequent flier program has sued the airline in a class action for "immorally" rescinding perks for "Million Milers."

George Lagen flies on average 200,000 to 250,000 miles a year, and achieved "Million Miler" status in United Airlines' Mileage Plus frequent flier program.  He said that the average customer would spend about $273,000 to reach one million miles.

"On the other side of the coin is United Airlines, which reaped millions -- if not billions -- of dollars from Million Miler members," the suit stated.

Elite frequent fliers aren't only battling with United.  American Airlines realized it was losing money from its "unlimited" first class flying program and began to crack down on its AAirpass holders, accusing some of them of breaking the program's rules.

Lagen claims that United's merger with Continental Airlines, which closed in October 2010, led to an "immediate and significant retroactive demotion of benefits to Million Milers."

He said that before the merger, Million Milers were "guaranteed Lifetime Premier Executive status for life" only through the purchase of actual tickets toward one million miles.  Those lifetime benefits included a one-time award of three system wide upgrades, two free regional upgrades a year, a 100 percent bonus for the miles flown each year, and other lifetime benefits, such as pre-boarding advantages, upgrade possibilities and seating priority.

Now, Lagen said his one million miles only gives him second-tier status.

He had to say bon voyage to the 100 percent bonus miles, which is now only 50 percent.  Lagen also no longer has the one-time award of three system wide upgrades nor the two regional upgrades a year, according to the suit.

He has sued for breach of contract, good faith and fair dealing, and has invited other fliers who became Million Milers before the merger to join a class action filed last Thursday in U.S. District Court for the Northern District of Illinois.

Copyright 2012 ABC News Radio

Monday
May142012

Frequent Fliers Sue American Airlines Over Loss of Unlimited Pass

Joe Raedle/Getty Images(NEW YORK) -- In 1987, American Airlines was struggling and desperate for money, so they started offering an unlimited lifetime airpass for $350,000, hoping for an infusion of cash.  Just 66 people purchased the AAirpass before the program was discontinued, but for those lucky few who got on board early, it was quite the deal.

AAirpass holders became American Airline VIPs, with virtually unlimited first class flight options for themselves and a companion.

Steve Rothstein, one such airpass holder, estimates he flew from his home in Chicago to New York a thousand times, Los Angeles and San Francisco 500 times, Paris and Sydney 80 times, all without paying a dime and racking up frequent flier miles.  He says he thought nothing of flying strangers with him or picking up a friend in Los Angeles and heading to Paris for a quick visit to the Louvre.

That was all before American cracked down, canceling his airpass three years ago, after an investigation found the airline was losing millions of dollars to these extreme frequent fliers.  The airline said Rothstein had abused the system by booking flights he never planned to use.

But Rothstein says he didn’t do anything wrong, and he’s suing the airline, hoping to get his pass back.

“A deal’s a deal.  I’ve made deals in business, which I’ve regretted five minutes later.  But a deal’s a deal,” he told ABC News’ John Berman.

Another AAirpass user, Jacques Vroom, who was also investigated and lost his pass, is also suing the airline.

In a statement to ABC News, American Airlines spokeswoman Mary Sanderson says cases like Rothstein’s and Vroom’s are an “extremely small percentage of our overall AAirpass accounts, but fraudulent activity costs all of our customers money.”

The litigation over whether this was abuse of the system or a bad business plan is on hold for now, since American Airlines filed for Chapter 11 bankruptcy late last year.

Copyright 2012 ABC News Radio

Thursday
Feb022012

Will You Have to Pay Taxes on Frequent Flier Miles?

Comstock Images/Thinkstock(NEW YORK) -- When Citibank sent a 1099 form to customers who had received American Airlines frequent flier miles for opening a checking or savings account last year, customers, travelers, and even certified public accountants were confused. Many were left wondering if they had to pay taxes on the miles.

As it turns out, travelers do not have to pay taxes on earned frequent flier miles because they’re considered a rebate for money spent.  But miles received when opening a checking or savings account, on the other hand, are considered a gift.

So what’s the difference?  The Los Angeles Times attempted to get to the bottom of the confusion quoting an Internal Revenue Service spokeswoman as saying, “A common analogy is buying a $500 television at a retail store and receiving a $50 manufacturer’s rebate.  It’s not income, just a deemed reduction of the cost of the television.”

In contrast, being awarded miles for opening a checking or savings account requires no spending on the customer's end.

If you received miles for opening any kind of account last year and are confused on whether you owe Uncle Sam, make sure to bring it up with your accountant when tax time rolls around.

Copyright 2012 ABC News Radio







ABC News Radio