Reply To: The so called fuel surcharge

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VintageKrug
Participant

Imagine if the surcharge was included in fares.

Would you expect the mileage redemption amounts to change every few months to compensate for the marginal increase (or decrease – fuel surcharges do come down from time to time>>!)?

Should BA renegotiate their corporate deals every time fuel spiked?

Fuel is one of the largest components of an airline’s cost base, and while you can protect yourself to some extent by buying your leisure tickets far in advance of travel, this is not really possible for business travellers.

Oil has been exceptionally erratic over the past few years; the graph below (Brent Crude, but I can’t be bothered to find a specific Aviation fuel chart) gives you an understanding of the huge swings, with oil doubling in the past twelve months, you can vary the period by clicking the drop down on the right:

http://www.moneyweek.com/news-and-charts/market-data/oil.aspx

Airlines cannot simply absorb these costs, and in the same way other domestic suppliers you use (for your car, heating in the case of fuel, but also for other commodities like wheat for your daily bread or the vegetables which feed your family) vary the price you charge, it doesn’t seem unreasonable for airlines to vary these commodity energy/raw material costs in the same way. Splitting the surcharge/taxes from the fare itself is the fairest way to do this, and works well if the whole cost is shown throughout the booking process.

You can see a breakdown of the surcharge between air passenger duty/environmental taxes, airport user fees and fuel surcharges on sites like Google’s ITA Matrix search.

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