“T he issue is that your employer bought YOU a D1 ticket for business purposes. It’s fraud to give it to a spouse and technically doing so creates a tax liability for you and a reporting requirement for your company. In some organizations this could be grounds for termination.”
This response by FlyerTalk member MSPeconomist to a question posed by FlyerTalk member injera in this discussion pertaining to trading a seat assignment in the premium class cabin with a spouse who was seated in the economy class cabin during an international transoceanic flight led to a vociferous debate amongst FlyerTalk members and kept becoming more controversial — so much so that the discussion was eventually closed to responses.
D1, by the way, is the short way of referencing Delta One, which is the premium class product offered mainly on international flights operated by Delta Air Lines.
Is Fraud Committed When Trading Your Premium Class Seat With Someone Seated in Economy Class?
“It can be fraud since the cost of the D1 ticket is a tax deductible business expense when paid for the employee to travel”, added FlyerTalk member flyerCO. “If the wife instead flies in D1 then only the coach fare is a tax deductible business expense. The D1 fare then becomes for the employee taxable benefit from the company. It would need to be reported out on their W2 as earnings and taxes withheld. Failing to report this thus does become fraud not only against the company, but against the IRS.”
Of course, there are contrarians to that point of view. “Forget the whole company or IRS thing. Pathetic”, countered FlyerTalk member NoStressHere. “The OP only wanted to know if the flight crew would have any problem. And the answer is they will not. In fact, if you stop and tell the crew in D1 what you are doing as your lucky wife is getting settled, they will surely make sure you are taken care of back in steerage.”
Agreeing that it is not fraud under any circumstance, “At WORST it is a breach of contract with Delta, and I guarantee you Delta couldn’t care less (unless you have a really cranky FA, and even then the repercussions are minor)”, posted FlyerTalk member ATLawyer. “As for IRS problems…. HAHAHAHAHAHAHAHAHA. I had a good laugh at this one and actually brought a few colleagues over who do tax litigation over to see the crazy.”
Of course, there can be a difference as to who paid for that premium class seat. “I own a business”, opined FlyerTalk member dzflyer. “If I had an employee who was supposed to be in business class but was trading the j seat for a y seat why would I continue to pay for it? Answer is I would not. If it happened again I would instantly terminate the person and find someone else who would honor our business contract. If you want your wife to sit in D1 pay for it out of your own pocket.”
Does swapping seats matter if it was paid versus upgraded? What about if someone else paid for the upgrade rather than you? What about if you switch your premium class seat — which was paid by your employer, for example — for a seat in the economy class cabin and pocket the difference in airfare? “For those who wonder if there are any cases, there are few involving frequent-flier miles, but Charley v. Commissioner from 1996 is somewhat on point. Charley was entitled to fly in first class to travel to clients. He would buy a first class ticket, submit the receipt for it, then exchange it for a coach ticket, upgrade it to first using his miles, and pocket the cash difference”, cited FlyerTalk member Spent_All_My_Miles. “The difference, the Tax Court and Ninth Circuit held, is taxable income.”
Summary
I can recall at least two times in my travels when I switched seats with someone who was traveling with me. In both cases, I swapped my premium class seat with family members who had never had the pleasure of experiencing the premium class cabin — and they did not know about it beforehand, as they were surprised.
“It is your seat,” said a flight attendant when I asked if it was all right for me to switch seats. “You can do whatever you want with it.”
In fact, the flight attendant seemed to encourage it, as she smiled at the thought of surprising someone with an experience such as sitting in the premium class cabin for the first time. I found out later that she gave extra special care to that member of my family — and I never asked for that.
I will never forget the conversation with one of those family members prior to the flight.
“I have your boarding pass by mistake. This is your seat assignment.”
“No, it is not.”
“Yes, it is.”
“No, it is not,” I repeated — this time, with a wry smile and a pat on the back.
The look on the face of that family member who suddenly realized what had happened was priceless and worth relinquishing that much vaunted seat — and hearing the review of the experience afterwards as recounted by that family member was equally priceless.
Unless there is consent from at least one flight attendant and any affected passengers who have a right to peaceful enjoyment of the flight, I do not believe in switching seats during a flight multiple times. In most cases, it is distracting and disturbing — and unfair — to fellow passengers as well as members of the flight crew who are trying to do their jobs.
As to whether or not fraud is committed when trading your premium class seat with someone seated in economy class — well…I will leave that for you to decide.
Photograph ©2008 by Brian Cohen.
