Who owns the miles/points?
 

CNN has reported that a German court recently ruled that miles earned for business travel belong to the employer, not the employee.

A German executive who had earned miles on work-related Lufthansa flights that would have bought more than $11,000 worth of air travel took the matter to court when the employer believed it owned the points.

CNN said the judge ruled in favor of the company, stating that miles collected on business trips belonged to the company that paid for the trip.

In Sweden, the company paying for the trip "owns" the miles in the sense that a bonus trip is regarded as a taxable salary. You are supposed to add the value of the trip as income on your tax form.

This has been frequently discussed here and in the Lufthansa Miles and More forum. You might want to do a "search" in those fora.

Quick answer, though:

1. In the U.S. it seems to depend on the terms and conditions of employment. It is reported that most employers do not claim the miles and points, although some (apparently a minority) do require they be redeemed for company business.

2. The U.S. Government used to require (on penalty of discipline, including being fired and having to repay the "value" of any tickets redeemed with miles earned on official travel) the miles and points earned on Government-paid travel be treated as belonging to the Government, but a law was passed early this decade saying that Federal employees could redeem the miles and points for personal travel/use.

3. The U.S. Internal Revenue Service at about the same time as the law mentioned above was passed, ruled that when miles or points earned on travel paid by your employer are redeemed for personal use, there is no requirement to report them as additional "wages and compensation" nor to pay tax on the value of the tickets/rooms/goods/services received through the redemption. They left open the possibility of requiring such declarations and payment of tax, however, if the individual sells the miles or otherwise converts them to cash.

Welcome to FT Magpie as per FT regulations, and thanks for the info!

Also, kados to Counsellor to a great summary re the US situation.

In situations where the employer does claim the FF awards, how are accounts with a mixture of personal and business FF miles handled?

I recall an issue some time ago when Newt Gingrich was speaker, all the Washington Politicians voted to allow themselves to keep and use the miles earned on Government paid travel to belong to the politician for personal for his "duty" to the country. No telling how much of our tax dollars went to F seats (Full fare).

Jim

I believe that as of a few years ago, federal employees get to keep they're frequent flyer miles. At one point, they only got to use them for upgrades.

Yes, they do. You also get to keep vouchers if you volunteer to get bumped and its not your normal work day (ie Saturday or Sunday). You are supposed to turn them in if you get one during your work day. Your time = your money. Their time = their money.

Yes, but in all cases the tickets were purchased with tax payer dollars. I happen to live in the former Gary Condits' "country, and he would fly back to CA almost every weekend to be home with his family. The tickets were spent with taxpayers dollars. Would'nt it make more since to make like the 6th trip using miles instead of taxpayers dollars? Just your tax dollars at work!

Jim

That was one reason, though not the primary one, that a company I headed didn't try to claim employees' miles. Tracking base miles might have been practical, but what do you do about elite bonus miles when the elite status was earned through a mix of business and personal travel? It got ridiculous. (The primary reason, in case anyone is wondering, is that people care about miles. The savings we would have obtained by making employees use miles for business travel would not have been worth the morale hit.)

it's my opinion that the airline owns the mi/pts in that it can cancel the program at any time, change the award mi's required, etc etc....of course the airline has a business to run and has to avoid irritating its customers....

note, i'm most familiar w/aa and my opinions may not apply to others...

It is regrettable that former Congressman Condit could not have spent all of his time back home in CA with his family. Of course, then there would not have been all the titillating scandal and tragedy that he contributed to in Washington.

With my previous company, the employee handbook stated that miles and points were the property of the employee, but such membership in programs could not influence ticket purchase decisions made with company funds.

I'm okay with that.

I can't find any documentation on my company's policy - guess I'll keep 'em.

I like the my time my points look at things. I am contracted for 8 hours a day. So I see it as this. If the trip takes more then 8 hours including the time in the location I was traveling to then the points are mine.

I always thought the official take in the U.S. was that no one owns the miles because the miles have no value. They aren't an asset, a currency, or a contractual promise of a future flightshare. I don't know what they are...a shapeless, odorless grey blob, perhaps...but I thought the U.S. government had taken care to not define them as a commodity with an attached value or exchange rate into a hard currency. (Probably for everyone's benefit, including enthusiasts like us who make a point to know and play the game to the best of our advantage.)

But then again...I have heard other cases where employers claim them, they are part of divorce or estate settlements, etc. So obviously they become "assetlike" in some cases.

Can you tell that IANAL? :D

Wow, I can't imagine the airlines would respond positively to a court decision which says "200,000 of Mr. So-and-so's miles now belong to Ms. Ex-So-and-so, so transfer them from his account to hers". Have they really done that?

Federal employees get few perks, so I am glad they get this one.

in previous discussions of this, people have said that if you send a death cert, and are the beneficiary, they will xfer the mi's, but, the al's can discontinue their program at any time....mrs clacko & i have the mi's and some other wording in our wills...

as others have said, a simple search will find info...unfortunately, i don't seem to be able to do a simple search...

Courts can make even airlines do things they would rather not do. But rather than order an FFP to transfer miles from the account of one person to another, a divorce court would usually "monetize" those miles, that is impute a value to them, and throw that amount into the balance when dividing up marital property.

That situation was heavily debated by the bureaucrats in DC. On the one hand, you don't want government employees benefiting from frequent flyer programs when the taxpayer is the ultimate source of payment.

On the other hand, the Federal Government is the single largest purchaser of airline tickets in the U.S. And probably the world. That spending power creates a certain level of stability in the airline industry. Plus the Federal Government played an important role in helping airlines recover after 9/11.

Does it make sense to let all those frequent flyer miles go unused and completely wasted? Ultimately, the decision was to allow employees to retain their miles. Overall, I think that decision was a good one, because it encourages people to help out the economy by traveling, which generates more spending and more tax dollars in the long run.

For some reason, I always assumed that the Federal Government negotiated airfares directly with the airlines. For most routes, they got some sort of discount and therefore weren't "buying" the FF miles to begin with.

Being virtually impossible to fire or lay off and possessing gold-plated health and retirement plans that don't ever get reduced in value are perks that MILLIONS of Americans would love to have.

Yes, I know wages for federal employees in the midrange and below are a little less than those in private industry.

But federal employees toward the top of the wage scale do pretty darn well. I know a bunch of them.

Not exactly correct. This was NOT the action of "bureaucrats" in the Executive Branch. It was CONGRESS itself that authorized Federal employees to keep and use frequent flier miles earned on government travel, under an amendment included in the fiscal 2002 Defense Authorization bill, which passed in December 2001. Sens. Joe Lieberman, D-Conn., and John Warner, R-Va., added the amendment, arguing that allowing Federal workers to keep their frequent flier miles would help federal retention and recruitment efforts. The law allows civil service, military, and Foreign Service employees to use frequent flier miles obtained on government travel for personal use. The benefit was made retroactive, allowing Federal employees to use miles earned prior to the bill's enactment.

Previously, Federal employees were not allowed to use their frequent flier miles because of the 1994 Federal Acquisition Streamlining Act (Public Law 103-355), which prohibited Federal employees from accepting promotional items they received while traveling at government expense. The miles simply were lost because the government could not have its own FF account.

Congress has always been able to use frequent flyer benefits -- even while they banned other Federal employees from doing so between 1994 and 2001. They were criticized in the press for not practicing what they preached until they changed the law to give the same benefits to all Federal workers.