Do I Get My Taxes Refunded if I Cancel an Award Ticket?

Reader Questions are answered twice a week by TPG Senior Points & Miles Contributor Ethan Steinberg.

It can come as a bit of a disappointment for new award travelers to learn that these "free" flights we keep talking so much about aren't actually free. Every award ticket you book will come with some amount of taxes, from $5.60 (for most flights originating in the US) on the low end, up to $1,000 or more for some long-haul premium-cabin awards. TPG reader Roberto wants to know if his taxes will be refunded if he has to cancel an award ticket ...

[pullquote source="TPG READER ROBERTO"]I booked an award ticket using AAdvantage miles on British Airways and paid around $600 in taxes. If I cancel the ticket I know I'll have to pay a fee to reinstate my miles, but will the taxes get refunded?[/pullquote]

Great question Roberto, as there are two important monetary considerations to be aware of when cancelling an award ticket. The first is that you'll often need to pay a fee to reinstate your miles, and the second is the question of whether or not your taxes will be refunded. Let's take a look at how each of the major US airlines handles this issue. The good news is that all three — American, United and Delta — have the same consumer-friendly policy here.

American Airlines has generous award-change policies, allowing you to make free changes to your reservation as long as you keep the origin, destination and class of service the same. This means that you can book a first-class award on Cathay Pacific from the US to China, and if Japan Airlines opens up award space at the last minute as it so often does, you can switch for free. I took advantage of this feature when planning my mega-Marriott-Maldives trip last spring, but I ultimately needed to cancel one of the speculative Qsuites reservations I'd made. Sure enough, after paying the $150 cancellation fee, my taxes from the award ticket were refunded to my account.

If you dig into United's contract of carriage, the intense set of terms and conditions that govern your entire interaction with the airline, you'll find that rule 27 section B governs voluntary refunds. While booking service charges are nonrefundable, if you have an unused ticket that you submit a refund request for, you'll be refunded the full cost including all taxes you pay. This means that fuel surcharges and departure taxes will be refunded, but not any change fees or booking fees. Delta has similar language in its SkyMiles terms and conditions, noting that "taxes and fees for unused award tickets are refundable upon request."

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Southwest follows a slightly different policy, partly because it doesn't have any international airline partners which are often the ones charging high fuel surcharges. Most Southwest award tickets will have exactly $5.60 in taxes, the standard 9/11 security fee applied to every flight originating in the US. Southwest is incredibly generous with its free award cancellation policy, but note that you won't receive a refund of the $5.60. Instead, it will be held in the form of a travel voucher which can be used towards future Southwest flights.

Alaska Airlines charges a fee to cancel an award ticket after 24 hours, but you'll get your miles and any taxes paid refunded. However, the $25 partner award booking fee and $15 call center booking fee (for awards booked over the phone) are nonrefundable.

Bottom Line

US airlines don't always stick to common sense when it comes to ancillary fee collection, but Roberto can rest assured that if he cancels an award ticket booked through American, United or Delta, he'll be refunded for any taxes or fuel surcharges he paid. The two exceptions to keep in mind are award service fees — like change fees or close-in booking fees, which usually aren't refundable — and Southwest award flights which will refund your $5.60 security fee in the form of a travel credit.

Thanks for the question, Roberto, and if you're a TPG reader who'd like us to answer a question of your own, tweet us at @thepointsguy, message us on Facebook or email us at info@thepointsguy.com.

Featured photo by Nicky Kelvin/The Points Guy