Frequent Flyers Can Use Miles For Themselves

By RICHARD STEIER

City employees, with some restrictions, can convert frequent flyer miles earned while traveling on official business for use in their personal travel, the Conflicts of Interest Board has ruled.

The COIB attached two caveats to its ruling, which is consistent with the policy of the Federal Government and some states but at odds with the practice in states such as Ohio and South Carolina.

City Can't Get Hurt

Employees are prohibited from booking business travel with an airline to build up their frequent flyer miles if a cheaper flight can be arranged on another airline. The board ruling also gave the city and its agencies the option of implementing a policy in the future that frequent flyer miles accumulated while traveling on city business could only be used for subsequent city travel.

The COIB issued its opinion in response to a request from an unidentified city employee at an unnamed agency. The board noted that neither the agency nor the city had a set policy governing the use of frequent flyer miles.

Sections of the City Charter bar public servants from using their city jobs to benefit financially. Because of those provisions, the Conflicts Board ruled in 1992 that a former city employee could not accept free airline tickets that were given as a gift at a going-away party when he retired, because it would "create the appearance that he has received a valuable gift because of his official position, and without promoting any government purpose."

Break Isn't Exclusive

The COIB has permitted city employees to accept discounts from businesses, including banks, if those discounts are extended as well to persons outside municipal government.

Five years ago, the Federal Government scrapped policies prohibiting its workers from retaining frequent flyer miles for personal use and encouraging employees to use accumulated frequent flyer miles for official government travel.

The COIB stated in its ruling that this latter policy had been hard to implement be cause airlines "regard frequent flyer miles as belonging to the individual traveler, not the organization that pays for the travel." The U.S. Government Accountability Office concluded that any gains from ensuring that the frequent flyer miles were used solely for an agency's benefit were negated by "the burden and cost of administering the program."

Won't Be Taxed

President Bush later in 2001 signed a law containing a provision allowing most Federal workers to retain promotional items such as frequent flyer miles as long as they were "obtained under the same terms as those offered to the general public and at no additional cost to the Federal Government." The Internal Revenue Service the following year announced that it would not assess taxes against employees on the benefits of frequent flyer miles.

The COIB noted that the South Carolina Ethics Commission had stated that public employees should not be able to cash in business-related frequent flyer miles for personal use "since such benefits result from the expenditure of public funds." But the city board took a position similar to that of the Washington State Executive Ethics Board, which opined that it was permissible for employees to make use of the bonus for personal travel as long as they "do not participate in the selection of a carrier when they receive frequent flyer miles for travel on that carrier."

"It would be impractical," the COIB opinion stated, "for the City to attempt to 'harvest' these miles, or to require City employees to segregate miles earned from City travel from those earned on personal travel and to use these segregated miles for some future City travel."