[Anonymous]

[openfly]

The UK Chancellor has announced that the UK government is to take action regarding the unreasonable fuel surcharge imposed by airlines, in the light of the considerable decrease in crude oil prices over the last year.
It will be interesting to see BAs reaction to this. One can only expect that they will tell the UK government to p..s off, and do nothing!

[Charles-P]

I understood the basic principle of Capitalism was that the free market set the prices for goods and services. If airlines were viewed as uncompetitive people would not fly with them.

Osbourne’s speech is no more than political grandstanding in my view.

[SimonS1]

Indeed Charles it is. Just like the Government talked big about utility companies but never acted.

What I would like to see is airlines forced to include the surcharge in their prices, not separately. It is a cost of doing business not a government tax.

[Charles-P]

Simon – hear hear !

I don’t impose extra charges on my customer because my travel costs increase or any other costs. I give a price and stick to it and it includes all the costs of our business.

[BigDog.]

I agree it may be grandstanding but disagree with the view to leave it to market forces Charles-P.

Just as deceptive “sales” and “discounts” terms have been legislated against so should the abuse of the term “fuel surcharge”.

It is not about the final/rolled up price – which should be down to market forces – but to address the misleading use of “fuel surcharges” when applied to ticketing.

As an example –
“Free” loyalty tickets are far from free as it is only the basic ticket without the add-ons, surcharges and taxes which are free.
Similarly the soon to be withdrawn BA “shareholder” discount, although it was marketed as 10%, in reality it often equated to less than a 4% discount on the actual amount payable.

Being neither extraordinary nor avoidable, as fuel is an essential cost of air travel a surcharge should only be permitted when the price goes say $120 per barrel. BA has the most egregious fuel surcharge yet is within the general ballpark on final ticket price when compared to others flying from LHR.

[ImissConcorde]

We’ve been told that the cost of fuel is down some 30% Can anyone name any product/service wich has been dramitacally reduced as a result?

[handbag]

SimonS1 and Charles-P
I agree,The cost of fuel charges varies so vastly from airline to airline. I would like to see them incorporated in the cost of the ticket, so real comparisons could be made. I would also like to see any other unavoidable charges included in tickets.

[AMcWhirter]

Well … in Australia, the two major carriers Qantas and Virgin Australia have stated they will not reduce their fuel surcharges.

http://news.smh.com.au/breaking-news-business/airlines-wont-cut-fuel-surcharges-20141202-3louj.html

[LuganoPirate]

Trouble is, if they hedged at $ 90 or $100 they’re not really in a position to bring down the surcharges. Nice talk from Mr. Osbourne as he clearly is trying to curry favour with the masses, but I think in this he’ll be unsuccessful, or the airlines will be given 18 months to phase in the new regs by which time their hedges will have mostly expired.

[canucklad]

It’s nice to see that George has recognized the practice, and has brought it into the public domain. So anyone watching Sky News, or BBC News or Bloomberg will ponder this erroneous practice.

Now roll in Willie Walsh and cohorts and let them talk about the need to hedge and future markets and volatility and increasing pressures on the aviation industry and downward trajectories and upward glide scope patterns that ultimately mean that passengers are indeed getting a great deal. Especially those customers who remain loyal and fly frequently.
By the time Friday afternoon has arrived and we’re all in “it’s the weekend” mode, this story will be as fresh in our minds as who got evicted from the jungle 2 weeks ago.

By Monday morning, the airlines will be starring in that old movie called…”Carry on regardless”

Edit to Add……. So he’s also abolished APD for under 12’s and then 16’s the year after. The middle classes must be ,beside themselves with joy, at the savings their going to make on their annual family pilgrimage to Mickey Mouse land. Does anyone have any idea why he’s suddenly being so middle class family friendly?

[BigDog.]

ImissConcorde – 03/12/2014 15:35 GMT

I would surmise that as a proportion of the marginal cost of a flight, that fuel would be the top one or two components.

Is there any other service which has such a high proportion of its marginal cost dependent upon fuel?

LuganoPirate – 03/12/2014 16:09 GMT

Given the Saudis have indicated that preserving their market share trumps preserving the price then I don’t see significant rises in the near/mid future.

[SimonS1]

Interesting to see the comments from Qantas in the article Alex links to.

………….
But the airline says the surcharges don’t even cover its fuel bill.

“Fuel prices have more than doubled over the past decade and Qantas’s current surcharges do not come anywhere close to recovering the cost of fuel to our bottom line,” a spokesman said.
…………

So now the purpose of the fuel surcharge is to cover the whole of the airline’s fuel bill?

It really is a joke. You don’t see taxis with a ‘fuel surcharge’.

It’s a cost of doing business and they should be forced to stop conning the public.

[PeterCoultas]

Charles-P/Simon S1

No question fuel “surcharges” are not that, merely part of the fare and should not be itemised separately – the reason is to avoid decent deals for FF redemptions – though a few are fair over this (UA generally) and BA (in europe).

as to “if airlines were uncompetitive people would not fly with them” trouble here is that there are hidden cartels! If you need to travel you are s****ed.

[BrotherJim]

The carriers only really have themselves to blame. Can anyone tell me how many other industries have surcharges? Most if not all I can think of factor in things like price into their overall cost and the price they charge people.

By having a seperate surcharge it makes it a semi easy argument to justify higher prices when fuel is up, but by the same token when prices come down it bites them if they don’t drop accordingly. But factor it into the overall ‘price’ they can do what they like.

That said I understand carriers such as Qantas for example have a surcharge because when booking a redumption ticket the customer has to pay the fuel surcharge . But if in the base ticket price then harder to charge extrra.

[Author]

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