Taxman to keep hands off Air NZ airpoints dollars

By CHRIS DANIELS

Inland Revenue has deemed Air New Zealand's airpoints dollars off limits to the taxman.

A new era in airline loyalty schemes will start on Tuesday when Air New Zealand launches its revamped frequent flyer programme.

In what the airline says is a world first, bonuses will be based on how much has been paid for a ticket, not the distance flown.

Airline loyalty manager John Whittaker said yesterday that the Inland Revenue Department had issued a binding ruling that the new "dollars" would not be counted as income when earned by people travelling on business.

This meant neither income tax nor fringe benefit tax needed to be paid by businesses on the dollars.

All existing airpoints will be converted into airpoints dollars on Tuesday. The changes are designed to make it easier for people to spend them, while also allowing Air NZ to better reward its high-spending customers.

Instead of a number of airpoints seats being put aside on each flight, passengers can book flights on the phone, online, or through a travel agent. When it comes to pay for the flight, they can use airpoints dollars.

When the revamped scheme was unveiled in July, Air NZ chief executive Ralph Norris said the existing one had become more of a rewards programme than a loyalty scheme.

He hoped the changes would give greater benefit to business travellers - especially those flying the Tasman and domestically.

Because Air NZ flies long routes - to Asia, the US and Europe - many points were being earned by passengers flying long distances on cheap, discounted tickets.