Why is the DOT Wasting Time With Fuel Surcharges?

Another week, another wasted effort by the Department of Transportation (DOT). This week, it’s a look at the latest guidance on fuel surcharges. Surcharges aren’t understood very well by much of the traveling public, and it seems like the DOT has some of those same misconceptions. I just can’t believe the department is bothering with this.

The DOT has now decided that fuel surcharges “must accurately reflect the actual costs of the service covered.” What exactly does that mean? Well, if you read the text of the notice from February, you’ll see it explains that the fuel surcharge must “reflect a reasonable estimate of the per-passenger fuel costs incurred by the carrier above some baseline calculated based on such
factors as the length of the trip, varying costs of fuel, and number of flight segments involved.”

In theory, this effort makes some sense. If an airline is going to have a fuel surcharge, then it should be directly tied to fuel. But in practice, this is impossible, it’s just going to create more work, and there is zero impact on the customer. Seriously. Here’s what a fare display looks like on Delta.com right now:

Delta Availability with Price

Do you know what the fuel surcharge is, if any, on this ticket? No, because it has been years since airlines were allowed to display a price net of surcharges. Anyone who says, “I saw a $400 fare but then they tried to screw me with $400 in surcharges” in recent years is either lying or not from the US. That hasn’t been legal here in years. If there is a surcharge, it’s baked into that price anyway.

What will the airlines do with this clarification? They’ll probably kill fuel surcharges, since we all know that it’s just about impossible to get a reasonable estimate on the price of fuel. It can take pages just to explain an airline’s hedging strategy, and the idea that an airline could know months in advance how much fuel will cost is silly.

So what will happen instead? They’ll just change the name. In that Delta example from above, here’s the breakdown that you’ll see only if you click the link for the specific fare breakdown:

Delta Fare Breakdown

See that “International Surcharge”? It’s filed the same way as other airlines file a fuel surcharge but it just has a different name. And since this flight is international, it’s not lying to say that it’s an international surcharge.

In other words, nothing is going to change. You aren’t going to see some huge windfall with ticket prices plunging or anything like that.

I know what you’re wondering. Why not get rid of this silliness and just increase the base fare instead of using a surcharge? It’s mostly because it’s just easier to do it this way. The way the systems work, it’s so much easier to just slap on a surcharge than it is to change a bunch of fares or even file new ones in thousands of markets.

For most travel purchasers, there is no difference anyway so it shouldn’t matter which method the airlines use. The only potential impact is for those corporate clients that have discounts which apply to the base fare but don’t apply to fuel surcharges. But that’s a business issue and certainly nothing for the regulators to get involved with.

In short, this will mean absolutely nothing for the average traveler, but it will probably give the DOT a reason to hire a bunch of new audit employees. Meanwhile, the airlines will just ditch “fuel” surcharges and replace them with something else. What a waste of time and effort.


57 Responses to Why is the DOT Wasting Time With Fuel Surcharges?

  1. If it is a fuel surcharge, then it should be directly tied to the cost of _fuel_.

    You basically seem to argue that it is inconvenient (on the airlines) to force that to be true. That’s not my problem.

    Me? I like the proposed new regulation.

    • CF says:

      Wonko – It’s not just inconvenient but it’s actually impossible. If you sell a ticket 10 months in advance, you’ll never know how much fuel will cost. Even if it’s 1 month in advance you can’t pin it down very well.

      But the point is that airlines will just change the name of their surcharge to be something else.

      • Roger says:

        Additionally the fuel cost will depend on how many people end up on the flight. If it is only half full then per passenger fuel “charge” is roughly double versus every seat filled.

  2. Nun says:

    You are misinformed. We have airlines pulling dirty tricks with YQ. (a) For example LH had some policy where on some tickets you couldn’t be refunded the fuel surcharge after cancelling but they do refund the fee. (b) They also play tricks with award tickets, where the fuel surcharge is 5 times the price of the fare and it’s paid by award travelers. (c) Then you have cases where fuel prices drastically fall (2009) and the fuel surcharge either remains the same or increases. (d) I’m told that the YQ is also used to work around contracted fares. (e) Finally the YQ is used for tax avoidance. Any taxes that are a percentage of the fare are effectively lowered by moving the fare into the YQ.

    You wrote, “it should be directly tied to fuel. But in practice, this is impossible.” THAT is sort of the point. What they claim is a fuel surcharge cannot possibly be tied to fuel. It is artificial fudging on part of the airlines and therefore is unwarranted.

    • CF says:

      Nun –
      a) If you have an example of a fuel surcharge not being refundable while the ticket is refundable, I’d like to see it. Please post details here.

      b) I agree that applying a surcharge to award tickets is obnoxious, but if the airline wants to devalue its frequent flier program, that it’s own issue. All this will do is have the airline change the name of the surcharge but it won’t impact what the customer pays.

      c) Correct, but just because the fuel price falls doesn’t mean the airline’s effective fuel price falls. Airlines that hedge lost a lot of money when prices when down, so how are you going to incorporate that.

      d) It doesn’t work around contracted fares but it gets added on top outside of a discount in many cases. But so what? That’s part of a business agreement between an airline and a traveling company.

      e) While technically correct that it wouldn’t be subject to any percentage-based taxes, there are none that would apply anyway. Only domestic travel has a US-based percentage tax and there are no YQ surcharges domestically that I’ve seen. Internationally, there is no US percentage tax so it’s not an issue.

  3. Nun- says:

    Sorry. Item (a) should have read, “For example LH had a policy where on some tickets you could be refunded the fare but not the fuel surcharge.”

  4. William says:

    Nun’s reasons are all right but the reason the DOT cares is the tax one. YQ is not taxed; fares are. To fix this, a better method would be to tax the fuel surcharges at the same rate as the fare, but absent legislation to do this, the DOT is doing the best it can to preserve its revenue base.

    • CF says:

      William – As stated to Nun above, this isn’t an issue. There are only percentage-based taxes domestically and no YQ surcharges that I’ve seen there. Internationally, there is no percentage-based tax so there is no tax impact.

  5. CessnaDriver says:

    I am wondering how much of this has to do with the excise tax? If the DOT can get airlines to publish their total fare into the base fare without any fuel surcharges, the government will collect more excise tax collections. Not criticizing the government for doing it if that was the case, because the realty is excise tax collections are down as a percentage of total travel related passenger revenue which excludes truly optional fees such as wifi and drinks.

    The way the excise tax is currently written, it only encourages the unbundling of fare products. Note NK’s strategy with unbundling fare. While NK allows passengers to select from their “optional” fees, the reality is that fees are inelastic. Additionally, the portion of the fare that use to cover the “optional” services that has become a fee is not subject to the US government’s excise tax. Thus NK has a two prong benefit to unbundling fares: taxes and the inelastic nature of the service. I see this same strategy with international fuel surcharges by most airlines.

    • Demo says:

      You’re exactly right. This has everything to do taxes. CF thought this effort by DOT might kill fuel surcharges. I say, great!

    • CF says:

      CessnaDriver – I’ve already mentioned how there is no tax impact here, but I do agree with you that a lot of the ancillary revenue generators are giving the airline a double bonus by not being taxed on domestic flights. I think it is time for the government to reconsider the taxation situation on air travel at a high level, and maybe that includes changing what’s taxed and at what rate. But there isn’t an impact with the surcharge.

  6. Dan says:

    As others have suggested, there’s more going on here than meets the eye. First, I’m a big fan of truth in advertising. If you call it a fuel surcharge, treat it like one. Nobody does. Call it a “screw you over” charge (that’s exactly what it is) and I’ll be happy.

    This YQ game just sucks. It causes problems in lots of areas… take BA’s North America – India fiasco a few years ago. They claimed that their $40 base fare + $500 in YQ was a “mistake” because the fare was pretty much zero. Um, nice try. That might be true, but when they are playing YQ games, they have a hard time expecting a “reasonable person” to know up front that the price was a mistake. Heck, a “reasonable person” doesn’t even know what YQ is! All they see is the all-in price.

    I also dislike BA because they want to pass those YQ surcharges onto their award ticket. Several hundred $ in taxes in fees makes that “free” award ticket… not free.

    I hate the whole practice, and support any efforts the government takes in ending, even if the interim step is to put pressure on the labeling.

    • Sanjeev M says:

      Yes BA and LH award tickets are useless for this reason. And they can get away with it but not the US carriers? I don’t know, but I don’t buy these YQ games at all when it comes to award availability.

      But if I’m just paying for a ticket, I agree with Cranky that it doesn’t matter where the addition is done as long as I see the total inclusive price.

      I know the FT and MP communities who love outsmarting these tickets by trying to dump YQ will hate this move, but this legislation might be a good thing actually.

    • FBKSan says:

      Agree on the award ticket issue–this is an area where fuel surcharges are an issue encountered by many run-of-the-mill travelers. As you suggest, Cranky, a rule that discourages airlines from charging fuel surcharges and instead substituting to another charge (“international”) won’t make the charge go away. But it *might* make it a bit harder for airlines to justify passing these charges on to customers. I doubt we’ll see BA and others dropping their ridiculous award “co-pays” as a result, but I’m okay with giving the airlines an incentive stop dumping extra charges into the “fuel surcharge” category.

  7. Scott says:

    Air Canada are a huge culprit on this. Their #1 trans-oceanic route (YYZ-LHR) has a fuel surcharge that actually exceeds their published fuel costs per seat (per their latest financials). Buy a J seat, and the fuel surcharge doubles again!

    I’m sure the flying public doesn’t have a problem with add-ons to the fare that must be remitted 100% to another agency/organization (such as AIF/PFC, Security Charges, actual sales/excise taxes). However, the invention of pseudo-charges like “FUEL SURCHARGE” (see above), “NAV SURCHARGE” (this money is not remitted $ for $ to NavCanada, and Canadian navigation fees have remained relative constant over the last 15 years), are bogus. Oh did I mention the AC NAV SURCHARGE for a flight YYZ-LHR is double the actual NavCanada fee?

    Why is it done? To recover revenue on non-revenue tickets like reward tickets. Air Canada/Aeroplan actually started collecting fuel surcharges on airlines that don’t charge them in the 1st place, and the initial blurb on the Aeroplan website said they were “being collected at the request of Air Canada”.

    I would like to Nominate Air Canada/Aeroplan for a Cranky Jackass, for being a major airline where the Fuel Surcharge actually exceeds the per-seat fuel cost. If you agree, please let Cranky know….

    • Arcanum says:

      I’ll second that.

      How they manage to charge such outrageous fares plus all their sneaky surcharges and still lose money baffles my mind.

  8. Why can’t airlines just pay their bills by the fare and not have to add a fuel surcharge, it’s all a scam to get more money from you while keeping the base fare looking low.

    You book a BA ticket to India that shows the same fare as everyone else, but can pay $1000.00+ more round trip as a fuew surcharge.

    Take EI/UA/DL out of the New York area to Dublin. UA/DL charge a 403.00 fuel surchange one way and EI 6.37. Sounds like UA/DL need to hire EI to buy fuel for them since EI only needs to add over $6.37 and not $403 like DL/UA does. Can little EI get a better fuel price then the mighty UA and DL, or is DL/US just cheating the public a tad?

    It’s not really based on miles flown since the charge can be different from the same hub on the same airline. UA will charge more to NRT/OSA then to ICN or HKG which are just about in the same area. And don’t you have to fly past Japan to get to Hong Kong where is should use more fuel but some how you pay about half as much as to Japan.

    • Jason D says:

      Did you read the article?
      “It?s mostly because it?s just easier to do it this way. The way the systems work, it?s so much easier to just slap on a surcharge than it is to change a bunch of fares or even file new ones in thousands of markets. ”

      Basically, it is a lot of trouble, time, work, and money to refile all valid fares out there, so adding fees (keeping the basic fare codes and structures) is the way they change prices in the short term. And with the regulation in the US requiring that the final price is shown, why does it matter? Just compare total prices.

    • CF says:

      David SF eastbay – This is a huge misconception but it’s flat out wrong. You will never see a BA ticket to India that shows the same fare as everyone else but ends up being $1000 more because of fuel surcharges. Airlines are not allowed to break out fuel surcharges in the final price and can only show it in a breakdown that is not prominent.

      • Cranky I guess I wasn’t clear on what I meant. BA is very high on fuel surcharges so as an example a YQ LAX-DEL-LAX using BA is $1360.00 but on UA its $790.00 or AA codeshare on same BA flts $590.00. While the base fare can be the same or in the same ball park, using BA will cost you more since they charge higher fuel surcharges then other airlines. VS will follow BA but since using AA codeshare via LHR is much lower, you see it has nothing to do with fuel (or UK government) since AA isn’t even operating any of the flights but is still charging a fuel surcharge that isn’t even close to what BA is charging.

        • CF says:

          David – But nobody will see this fuel breakdown when they are looking to compare flights. Instead, they’ll just see the final price so if everyone has the same base fare but BA has a much higher surcharge, then people will just see a much higher fare on BA.

          • True if people use online booking instead of a human travel agent. But the point is people may be thinking it’s all the same fuel surcharge amount that every airline charges when it is not. So everyone needs to do their home work and check different airlines for the total prices since the YQ isn’t known until the end.

            The BA/AA is a good example how BA is flying all the segments, but if you book using the AA code you can save hundreds of dollars.

          • CF says:

            It shouldn’t matter if it’s a human travel agent or not. Nobody is allowed to quote airfare net of taxes, fees, and surcharges. If you’re a travel agent, the only place you’re seeing it net of taxes and surcharges is if you’re looking at the raw fare display. But any low fare pricing functions should clear that right up.

  9. Paul says:

    In most other business, costs are fiqured in, and you get a total price, plus maybe some taxes thrown on top. Having worked for four airlines (years ago)I’m not sure they are run like businesses.
    But isn’t the fuel surcharge nonsense another way to avoid paying travel agents more commission, like the cruise industry. Although not all agencies earn air commissions here, that’s not the practice in other countries.
    And don’t get me started on how it is another way to make my frequent flier miles even more worthless!

    • CF says:

      While it’s generally true that fuel surcharges aren’t commissionable, that is just a business arrangement between the airline and the agency. The airline can offer whatever percentage it wants on the fare in its dealings with an agency. Most airlines offer 0% commission as standard these days, so it really is just built into a contract between the two parties if there is a commission to be had. True, that’s not the case everywhere in the world.

  10. longhorns says:

    “I know what you?re wondering. Why not get rid of this silliness and just increase the base fare instead of using a surcharge? It?s mostly because it?s just easier to do it this way. The way the systems work, it?s so much easier to just slap on a surcharge than it is to change a bunch of fares or even file new ones in thousands of markets.” Cranky-Are you kidding? For revenue management, airlines change their fares minute by minute and their computers can easily handle fuel charge data plugged in. On another subject, travel writers have shown that the fuel charge per passenger isn’t as big a deal as airlines claim and airlines are inflating their claimed fuel costs to make a profit on them.

    • CF says:

      Have you done airline pricing? I have, and I can tell you that it’s much easier and almost always less costly to just put a surcharge on than it is to change every single fare in the system.

      • Jim says:

        That may be true, but that’s not the passenger or government’s problem. If that is really the case, then the airlines need to re-design their systems.

  11. Chicago Chris says:

    I’d love to get some discussion about NK’s fuel disclosure on its website. If I’m reading it correctly they’re simply disclosing how much fuel will cost, but under this regulation would they have to do away with it and just roll it all into the base fare?

    • CF says:

      Chicago Chris – Spirit is a little different, but yes, that’s true. They actually file the fare as a Q surcharge instead of a YQ. The Q surcharge is actually a part of the base fare that is shown separated out. So even on domestic travel there are no taxation issues here because it’s a part of the base fare. Technically, since they show it as a fuel charge on their website, it would have to be closely tied to the price of fuel for it to continue to be shown that way.

  12. Bulldog says:

    I’m surprised at the uncharacteristic lack of nuance in today’s post. YQ is, as many have already noted, used by the airlines for a number of reasons other than ease of fare adjustment. From their perspective, it is used to avoid tax, decrease frequent flyer mile liability, and dilute corporate and other discounts (which are only assessed on the base fare.) And all these things are ‘hidden’ from demand-altering behaviour because up till now the government hasn’t cared. Regardless of whether you agree that the travelling public has an interest in changing these policies — and I do — surely you can’t object to the government at least investigating? I’m giving Cranky the benefit of the doubt and assuming he hasn’t run into these ‘alternate’ purposes for fuel surcharges, but if someone like him doesn’t know about it, that’s even more reason for the government to bring light to the issue!

    • chinger says:

      I would hardly say it is “hidden” from demand altering behavior. Additional fuel surcharges will increase the final cost of a ticket (award or normal), and would certainly alter our demand behavior. While I do agree that it is highly annoying and that a better way should be found, it is, unfortunately, an imperfect solution to an imperfect problem.

  13. Fred says:

    To all of you who are complaining about the fees and why they are charged instead of the base fare, there actually are good reasons for this – see here http://www.flyertalk.com/forum/16605667-post28.html
    (I won’t try to explain them here myself).
    But the point here isn’t that such fees are necessarily right or wrong, but just that renaming them solves everything and they aren’t really going away.

    • Nun- says:

      Fred- Many of us are fully aware of what’s written there. That doesn’t change any of the items I listed, especially (e) regarding tax avoidance. Frankly, the arguments stated there indicate an IT issue and airline laziness.

      • Fred says:

        Several things:
        -Yes, it is partially IT issues. But those trace back to the whole airline ticket fare/distribution system so there’s not much that can be done about it.
        -(a) This is talking about US policy, so LH policies regarding refunds and the like are a different issue. US-based airlines (in my experience) are actually good about refunding all taxes/fees/charges minus a cancellation fee.
        -(c) Again, airlines will just rename it to ‘international surcharge’ or ‘stupidity surcharge’ or whatever, and nothing else will change.
        -(d,e) Those aren’t consumer issues – those are government and policy issues, which could be changed pretty easily by adding or modifying either tax law or contracted fares.

        • Nun says:

          I’m sorry. I shouldn’t have listed LH. (I was confused by the case where LH tries having it both ways. For awards, they don’t consider the YQ as part of the fare, so you pay it. For nonrefundable cash tickets though, they do (did?) consider it part of the fare. If you cancel the ticket they keep the YQ. More at http://www.flyertalk.com/forum/miles-more-lufthansa-austrian-swiss-other-partners/1057900-tickets-issued-08-march-2010-yq-wont-refunded-anymore-non-ref-tix.html )

          The defenders seem to think the only YQ issue is awards. OK, fine, but that doesn’t change the fact that it’s deceptive. There must be accuracy in labelling just like any other industry. Otherwise it is, by definition, deceptive. This is part of the reason consumer protection laws exist for various industries.

          As Jim mentioned, their labelling is used to deflect customer anger at fares. If you disagree, then just let them call it the Terminally-ill Orphan Fund Surcharge. Who’s going to complain about that after all? If it’s not truly fuel, don’t call it fuel.

    • CF says:

      Fred – That’s a great link, thanks for sending. I hadn’t actually thought about the pro-ration piece but that is a good incentive for an airline to do that – keeps more revenue that way.

      One thing I will correct is that Q vs YQ commission issue. While it’s true that the default is that YQ isn’t commissionable and Q is, we at Cranky Concierge have several airline contracts we participate in that specifically state the Q isn’t commissionable. So that’s another lever that an airline could use these days. It’s a minor point in the scheme of things.

  14. CF says:

    Judging from the comments, it seems that the misconception about this might be even worse than I thought. I’ll respond inline here, but I think I’m also going to do an air travel tax post for tomorrow.

  15. LaHood and the DOT are idiots!!!! The industry is deregulated correct????

  16. It’s about time that the DOT did its job. *ANY* other industry would have not been allowed to get away with this fraud for so long; could you imagine a Supermarket adding an arbitrary surcharge (which is how this surcharge is calculated), calling it “fuel”, and getting away with it? Every state DA would be immediately shutting it down, but the airlines are exempt from state laws. And the DOT is generally asleep.

    Oh, and why do I care? Because some frequent traveler programs charge you the “fuel” surcharge on redemptions. And the 20% off coupon the airline gave me doesn’t apply to the “fuel” surcharge. And the corporate discount that my employer negotiated does not apply to the “fuel” surcharge.

    Want real-life examples of this?

    1. Redeem a 20% off coupon on AA a JFK-LHR roundtrip in economy class, departing on 21 March and returning on 26 March, an you pay $734.50 instead $758.70. Your 20% discount saves you $24.20, or 3.2% of the total cost.

    2. Redeem 40,000 AA miles for a JFK-LHR roundtrip in economy class on BA, departing on 21 March and returning on 26 March, and you have to pay $637.70 in “fuel” surcharge and taxes. Buying the ticket outright would be $758.70.

    3. Redeem 135,000 AA miles to travel to DEL roundtrip on BA in business class, a destination that AA no longer serves, and you have to pay $1,284.00 in “fuel” fees in addition to taxes, for a whopping total of $1,447.65. This is in addition to your hard-earned 135,000 AA miles, which used to be free (except for taxes).

    4. Buy a one-way LHR-YYC ticket and the “fuel” surcharge is £180; buy a one-way ticket YYC-LHR anbd the “fuel” surcharge is £276. Same exact cities, 53% difference based on direction of flight.

    Yes, the “fuel” surcharge is fraud, and it’s about time that the DOT cramped down on it.

    Here are some facts:

    Definition of FRAUD
    a : deceit, trickery; specifically : intentional perversion of truth in order to induce another to part with something of value or to surrender a legal right
    b : an act of deceiving or misrepresenting : trick

    Definition of DECEIVE
    : to cause to accept as true or valid what is false or invalid

    Definition of MISREPRESENT
    : to give a false or misleading representation of usually with an intent to deceive or be unfair

    49 USC 41712
    Unfair and deceptive practices and unfair methods of competition

    (a) In General. – On the initiative of the Secretary of Transportation or the complaint of an air carrier, foreign air carrier, or ticket agent, and if the Secretary considers it is in the public interest, the Secretary may investigate and decide whether an air carrier, foreign air carrier, or ticket agent has been or is engaged in an unfair or deceptive practice or an unfair method of competition in air transportation or the sale of air transportation.

    If the Secretary, after notice and an opportunity for a hearing, finds that an air carrier, foreign air carrier, or ticket agent is engaged in an unfair or deceptive practice or unfair method of competition, the Secretary shall order the air carrier, foreign air carrier, or ticket agent to stop the practice or method.
    […]

    • Jason H says:

      It is in fact not fraud. They display it as a fuel surcharge and that is what you see. If they called it the “Soft cuddly kitten” surcharge when there were no soft cuddly kittens, then it would be fraud.

      I agree that the YQ is annoying and in some cases ridiculous, but it is not going away anytime soon. With the volatility of Jet-A it would be financially irresponsible for an airline not to try to recoup that cost from the passengers they are carrying.

      I’d also like to point out that your number 4 is a bit of a red herring. The cost of fuel in Canada, and especially in a tightly controlled and over-taxed airport like YYC would necessarily force up the cost of the fuel the airline needs to load aboard.

      Would you prefer the Allegiant Air model that the DOT smacked down? They wanted to let consumers buy a standard fixed-price ticket or a lower-priced one that could go up or down before takeoff. Passengers would be told the maximum fare possible. The DOT however told them no. So.. what do you want? Allegiant had a thoughtful and workable solution that the DOT didn’t like. Seems that the DOT has given carte blanche to the YQ.

      • Oliver says:

        Jason, yes, jet fuel prices are volatile. But given that, if I buy a ticket today, how does the airline know what the right “fuel surcharge” is to recoup the cost of fuel for the flight in, say, December?

        • Jason H says:

          That was the point I was trying to make. Where did you think I said otherwise? The YQ is going to stay around and the only airline I know of that had a compelling and interesting ‘solution’ got that solution smacked down by the DOT.

      • Scott says:

        If they say it’s a fuel surcharge and it exceeds the total fuel cost (AC, BA to name a few), it’s fraud. It’s like saying the “10 cuddly kitten surcharge” and only getting 5

        • chinger says:

          Which goes right back to the problem of how do you predict the cost of fuel, which goes right back into why have a surcharge at all, why not just increase the “base” fair, even though at the end of the day, the amount we pay is the same.

      • Let me give you the full picture of point 4:
        LHR-YYC one-way GBP 180
        YYC-LHR one-way GBP 276
        total of the above: GBP 456

        LHR-YYC roundtrip GBP 359

        Are you convinced now that it is a scam? The COST of fuel to BA is no different between the two scenarios, yet the “fuel” surcharge is 27% higher with the roundtrips.

  17. Jim says:

    This is not a waste of time, it’s a valid regulation designed to stop airlines from deflecting customer anger at their fares. Fares are going up, and customers will complain. However, if the fuel surcharge goes up, customers will not complain, knowing that the price of gas is increasing and thinking that the extra money is going for the fuel. By increasing the fuel surcharge instead of the fare, airlines are making customers think that they are not keeping the extra money. If the airline wants to have a fuel surcharge, that money better be going for fuel, just like if the airline charges a tax, that money should be going to the government and not to the airline.

  18. Oliver says:

    I have never worked for an airline. If the claim is that changing base fares is so (much more) difficult that a fuel surcharge that’s not representative of the actual cost is the better way to react to changes in oil prices, why is that if airline XY increases their fares, often all major competitors match that increase within hours or days? Is that always done via surcharge increases, or are they suddenly able to push the magic +$10 button and adjust the base fares?

    Personally, for revenue tickets ultimately the base price is what matters (and yet if there was no regulation, what do you think would they be advertising?). But as the airlines are using the same surcharge for award tickets, I think it’s reasonable to call them out on this. Don’t advertise that I can earn a free flight and then hit me with “fuel” surcharges that make this “free” flight only slightly cheaper than a revenue ticket. That’s a scam.

    • CF says:

      Oliver – When there are general fare increases, those are met by fare increases from the other airlines and not surcharges. But it’s not a perfect science. Because there are so many different fares out there, some will get left off in the increase and others will be changed even though they shouldn’t have been. It gets fairly messy. Sometimes that’s why it takes several days to know if an increase is actually going to stick or not.

      Now, if increases were really on all fares, it would be easy to do (it’s never that way) but it would be quite costly to do with the system at hand.

  19. Tomstrr says:

    Crank wrote “And since this flight is international, it?s not lying to say that it?s an international surcharge..” To knowingly mislead or deceive is lying. Its a lie. He also wrote: “the idea that an airline could know months in advance how much fuel will cost is silly.” Not silly at all, to most. The idea that airlines might think so could explain a great deal of their problems. Anyone, with sufficient money, can obtain a specific price, for a specific amount of fuel to be delivered on a specific data. One might not want to, they might bet wrong. As pointed out by a previous commenter, the airlines are claiming to know the future cost of fuel, by having a surcharge – at a specific amount.

    • Jason H says:

      The issue with your statement about sufficient money being able to buy options is that you need the money. With airlines that isn’t a given. AA can’t buy options easily right now. VX likely doesn’t have the capital for it. DL does buy the options and you can see it in their fares against their Skyteam partner AF/KLM who not only haven’t hedged as much, but also have to pay the increased European cost of fuel (and now carbon taxes).

  20. Pingback: A Primer on US Aviation Taxes That Apply on Domestic Flights - >> The Cranky Flier

  21. Thank you CF says:

    Still amazed that people think YQ is for the airlines to avoid paying government taxes, even when confronted with evidence that it isn’t. LOL

    Cranky, did you see the footnote at the end of the DOT’s guidance?

    2 For example, descriptions such as the following
    would be acceptable: ??Fare includes a fuel
    surcharge. On average our passengers paid $xx.xx
    more for fuel during 2011 in their ticket price than
    they did in 2000;?? or ??Fares include a charge for
    fuel. On average in 2011 our passengers paid $xx.xx
    for fuel as a part of their ticket price.?? Of course,
    such assertions must be based on the carrier?s actual
    paid enplanements and fuel expenditures.

    If the DOT is actually serious it sounds like a carrier will either have to have 1 universal fuel surcharge amount or at least make a regional travel calculation if they want different amounts depending on the market.

    • CF says:

      More disclosure… *sigh* There’s already so much disclosure out there that people don’t read it anyway. This is just going to provide more text that people won’t read.

  22. Cranky I can’t reply to your last reply to me so here’s a new comment on the same subject.

    A human travel agent who does bookings all day will know that BA charges more YQ tax so can guide their client to another airline they know charges less YQ tax. An online booking tool would not do that so people need to know there is a difference who you fly can effect the overall cost of the ticket because of what they charge for YQ.

Join the Conversation

*