Just a quick post to let you know about some new benefits for Citi Platinum Select AAdvantage card holders including free first checked bags, priority boarding, 10 percent miles back on American Airlines AAdvantage miles redeemed.

From the press release:

The ability to earn more AAdvantage miles faster.

• Ten percent miles back on AAdvantage miles redeemed by cardmembers, up to 10,000 miles per calendar year. For example, if the cardmember uses AAdvantage miles to book a 50,000 mile roundtrip flight, they will receive 5,000 AAdvantage miles back in their AAdvantage account approximately 6-8 weeks after booking.
• Double miles on eligible American Airlines purchases.
• No annual limit or cap on how many AAdvantage miles cardmembers can earn with card purchases.

More ways to save time and money when booking, boarding and beyond.

• First checked bag free for cardmembers and up to four companions traveling on the same reservation for travel booked and ticketed on or after April 2, 2012. For example, a family traveling in the main cabin from JFK to LAX roundtrip with four checked bags could save $200.
• Priority boarding for cardmembers and up to four companions traveling on the same reservation for travel booked and ticketed on or after April 2, 2012.
• Cardmembers earn a $100 American Airlines Flight Discount that can be used to book any available qualifying flight on AA.com for each year following which they spend $30,000 in purchases and renew their Citi Platinum Select / AAdvantage card.
• 25 percent savings on in-flight purchases of food, beverages and headsets when purchases are made with the Citi Platinum Select / AAdvantage card or any other Citi / AAdvantage card.

The card comes with a $95 annual fee, which isn’t much when you consider the money you can save on bag fees.

Full details at www.aa.com/citi.

You probably recall the controversy Citibank started last month, when they started sending out 1099s to customers that received big AAdvantage Mile signup bonuses for opening new accounts accounts last year.

The move made a lot of customers unhappy, and as you might have expected, it was only a matter of time till someone filed a lawsuit.

The Courthouse News Service is reporting that last week, plaintiffs Bertram Hirsch and Igor Romanov, through their attorney James Kelly, filed suit in federal court claiming that:

Citibank lured them in by offering 40,000 frequent-flier miles to open an account – but didn’t tell them they had to report 2½ cents per mile as income to the IRS…

Citibank grossly overvalued the miles, which have no actual value to customers and should not be taxable.

Seth over at The Wandering Aramean does an excellent job explaining that while the IRS hasn’t said that Citibank is correct, or that the government is going to go after taxpayers, the agency confirmed that big mileage sign-up bonuses can be considered a taxable event.

The plaintiffs concede that it’s possible for the miles to be taxable, but disputes the value of each mile:

Even if the airline miles were taxable, Citibank’s practice of valuing the airline miles at 2.5 cents per mile is grossly unfair and deceptive. Airline miles have no value to Citibank customers that can be fixed at the time they are awarded. If redeemed, these miles typically have an average value to customers of between .76 cents per mile and 1.2 cents per mile. At least one study recently concluded that American Airlines miles in particular are only worth about .76 cents per mile.

I agree, 2.5 cents per mile does seem a little high.

Now this seemed a little odd:

Hirsch, a semi-retired lawyer, says he became concerned when he read the fine print on Citibank’s offer letter, which states: “Customer is responsible for taxes, if any.”

Hirsch says he asked a local Citibank employee if the miles were taxable, to make sure he did not exceed a certain income threshold, so he could keep his retirement benefits. He says the employee assured him the miles were tax-free.

It seems to me that if the attorney Hirsch was worried about an item in the terms and conditions of the offer, he should have consulted with a tax attorney rather than a bank employee.

So far, there’s been no repose from Citibank nor have I been able to find a link to the actual. petition.

Prediction

I’m not a Court TV analyst, nor is my name on a short list fill the next vacancy on the U.S. Supreme Court, but I do have AAdvantage Elite status so I think I’m qualified to make a few predictions about the legal outcome of this case.

Citibank will settle the case by offering to pay plaintiffs’ attorneys a large sum of money, a portion of which will probably go to the two lead plaintiffs, and anyone that decides to join the case as a plaintiff, will get a few extra miles worth less than $25.

Photo: Mystery Judge
Credit: Mike Licht on Flickr

Photo “The ubiquitous cross-eyed Bonus pig – mascot of a cheap grocery store found all across Iceland”
by Jason Eppink on Flickr

Citi is offering 75,000 bonus AAdvantage Miles after $4,000 in purchases within 6 months of card membership. This offer is valid for first time cardmembers.

Go here to learn more details or to apply.