[Anonymous]

[TerryMcManus24]

Qatar Airways to cut fuel surcharge…Lets hope first of Many…Monday, January 12 – 2015 @ 17:00

Qatar Airways announces plans to reduce the fuel surcharge following the plunge in crude oil prices, reveals the company’s CEO Akbar Al Baker.

However, Al Baker has declined to comment on how much the cut would be or when it would be implemented.

“As far as the fuel price reduction is concerned, there will be no reduction in the ticket fare, but there will be a reduction in the fuel surcharge that we are charging,” Al Baker told reporters prior to an event welcoming its first A350 XWB in Doha.

Since June 2014, crude oil prices have more than halved and have now dipped below $50 a barrel for the first time since May 2009.

“When the fuel price rose to $100 a barrel and over, the airline was in the negative territory as far as its finance was concerned. So as the oil price is going down, the airline will now get into profitability. This does not mean that if the fuel price went down 50 per cent, we have to start reducing the ticket by 50 per cent,” notes Al Baker.

No other airline in the region has announced any plans yet to cut fuel surcharge or fares on the face of falling oil prices.

In December 2014, IATA had said that global airlines would report their strongest profit margin in more than five years this year due to falling fuel prices and stronger economic growth.
http://ameinfo.com/blog/videos/latest-videos/aviation-latest-videos/qatar-airways-cut-fuel-surcharge-rules-low-cost-plans/

[TominScotland]

This is an interesting line of argument from Al Baker (and, indeed, other airlines). As noted elsewhere, assuming oil prices remain low and once hedging has worked its way through, in theory there should be no need for a fuel surcharge at all – wishful thinking, me thinks.

However, Al Baker also says that there will be no change to the core ticket price. Prior to the introduction of fuel surcharges, the cost of fuel was part of the ticket price and presumably still is. Therefore, surely, airlines should also be reducing the core ticket price in the same way that energy companies are (reluctantly) being forced to do?

Or is my logic somehow flawed?

[TerryMcManus24]

No…your logic is sound…and in a perfect world would apply……Wonder who will be next to SLASH their fuel surges extras…and even as you suggest abolish them completely…until next time…

[SimonS1]

My reading of it was that the base fare would stay the same but the airline surcharge would reduce therefore the price would be cheaper overall.

[TominScotland]

Yes, of course SimonS1, but my argument is that, historically, the base fare included fuel costs (along with labour, catering etc etc etc) so that also SHOULD come down…..

[AMcWhirter]

http://www.businesstraveller.com/discussion/topic/George-Osborne-to-act-against-fuel-surcharges.?page=2

I posted a link (in the above thread) o a piece in the Irish Times dated January 07.

http://www.irishtimes.com/business/transport-and-tourism/qatar-airways-to-cut-fuel-surcharge-1.2057828

It would appear the overall ticket price will remain unchanged. The base fare element would increase to offset any reduction in the fuel surcharge.

[SimonS1]

Not sure I agree there Tom.

The airlines introduced fuel surcharges in 2004 – BA in May 2004 when oil was $38 a barrel. Since oil is current well above that ($47 a barrel) I can’t see why the fuel element of base fares has decreased and should be falling.

Of course the fuel element of the surcharge has decreased and should be falling, then again we know the airlines have metamorphosised the charge into a general surcharge so as to create ambiguity and enable them to avoid reducing it.

Still not sign of the action Osborne promised either. Great talker is our George.

[SimonS1]

Alex – I find that article quite ambiguous. When it refers to no increase in the “ticket fare” I read that to mean the base fare. I didn’t read it that the base fare would be increased as the surcharge falls, that isn’t the type of thing you would be openly telling the press.

[MrMichael]

I agree with you SimonS1. The way I figure is the surcharge is being reduced, the fare remains the same, so cheaper tickets. Eventually I guess the surcharge could go in its entirety, and then scope (fat chance) that the actual fare could go down.

Ironic on the same day we have Qatar reducing the charge and BA apparently increasing it. Clearly the two are not colluding at least!

[TominScotland]

Mr Michael,

“BA apparently increasing it” – not sure this is the case. If you read the thread, I think this apparent issue was explained.

[Thocha7]

That’s good news from QR.
1.Is this make a noticeable fare difference for a passenger?

2.This might allow other air lines to consider the same.

Finally I believe monopoly is unhealthy and insecure rather competition is healthy and secure.

[Author]

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