[LuganoPirate]

Thanks for posting the link back to this interesting topic Simon, which I just remembered was started by you. I’ll repeat here what I posted in fuel surcharges.

I was just read an article prepared for Swires main board that as CX’s hedges expire they will not be renewing them for the foreseeable future. With fuel accounting for 33% of their operating costs they are now only 35% hedged compared to 65% last year.

Adding some thoughts to this, if the price of kerosene continues to fall below the base line at which airline calculate their break even fuel price upon which they add the surcharges, this will feed directly into the bottom line, assuming they don’t cut their fares, which I doubt they will.

So will they instead cut the fuel surcharge, which technically should be a zero sum game for them but of course is now a source of extra revenue and profit. Again I suspect not and this will become a more general “carrier imposed charge” as Simon suggests.

In many ways the fare structure of the LCC’s is much more transparent than that of the legacies.

[canucklad]

Mmm……
“Qantas/Emirates flight to Europe costs AU$285 one-way for economy, AU$385 for Y+ and a hefty AU$540 for first and business class”
I wonder if QF/EK justify the variance in cost between the cabins, down to the size, or rather weight of the chair you sit in, and subsequently the required fuel to fly that seat and potentially extra luggage allowance across the globe.

You could potentially call it the big arse tax rather than the fuel surcharge levy!!

And agree with LP, the airlines will just rename the charge.

[SimonS1]

Indeed Canucklad, that’s why I believe they should be forced by law to include the surcharge in the headline price.

Fuel is a core part of doing business. You don’t get London cabs adding in a ‘fuel surcharge’.

This is in the control of the airline, as opposed to APD and airport taxes which they generally just collect on behalf of other parties.

As we all know situations like this generally conspire against the consumer – like the energy companies jack up prices at the first sign of a hike in wholesale prices but generally have to be shamed by the government before they reduce them again as wholesale prices contract.

Now we have the farcical situation of oil prices coming down but electricity prices still going up due to the excessive cost of things like wind energy.

[SimonS1]

BA’s fuel costs down 7.5% year on year according to today’s results. This will increase as hedges roll off.

[openfly]

Hi SimonS1

BA are desperate not to lower the fuel surcharge or include it in the fare.
If this happened how would they charge the extortionate add-on to Avios bookings. For BA the fuel surcharge is an excellent vehicle for having a large fare element when an Avios ticket is booked.

[MartynSinclair]

Its a pity the Government does not direct this “fall like a stone, not a feather” message to the airlines as well as retail fuel suppliers and supermarkets…

http://news.sky.com/story/1367694/petrol-price-guarantees-demanded-by-treasury

[Author]

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