Whay is BA YQ classified as a Tax?

Back to Forum
Viewing 15 posts - 16 through 30 (of 31 total)

  • craigwatson
    Participant

    Rich – i just looked at a pure AA return mia-lhr and AA has a fuel surcharge of £175. just looked at a lon-auh return with EY and they also have a fuel surcharge of £154.

    My only point is off the top of my head i can only think of two airlines worldwide that dont have a fuel surcharge, and one of those just puts it in their fares.

    Maybe some airlines are just better at hiding the charge than others.


    RichHI1
    Participant

    Craig
    I see 2 issues
    1. To be clear when you buy a revenue ticket you get quoted a fare that includes Taxes, surcharges and fees. They are separate and charged on the ticket in accordance with the IATA model. So yes AA probably includes a fuel surcharge in its pricing model as does BA.
    The difference is when you redeem an award free ticket, where AA or JAL or many other carriers issue a free ticket which is still subject to taxes but these are identified as Government taxes. Any Airline surcharge on free tickets such as booking by phone as non elite are separately identified not as a tax.
    When you redeem on BA they add part of their pricing model to the free ticket so it is not Free. They then say it is a surcharge or fee and included within the taxes, fees and surcharges on the ticket as per IATA rules.
    Thus issue one is BA are non transparent or honest in the way they issue free award tickets as they are not free. This is not a BA issue though as they are following the IATA rules which allow for this. The resolution lies with IATA but as I have said without regulatory control there is no commercial interest to rectify this.
    2. I think many of the other posts are criticisizing the pricing model and policies of BA in comparison to other carriers. I can see this annoying posters however in a free market all competitors have the right to charge whatever the market will bear and allow consumers to choose accordingly. The problem is in routes that are not open skies and government protectionism prevents free market economics. I would not personally criticize their pricing policy therefore, indeed I think the US carriers are far more predatory in their pricing on certain routes than BA are.


    DisgustedofSwieqi
    Participant

    Rich

    To be clear, I’m not complaining about BA pricing, as you say we have a choice and I use mine.

    The only reason I put the prices n this thread is because Craig criticized me for showing one side of the story without the other.

    I think you can guess who I bought for the trip.

    There may be a fuel surcharge in the whole price, but the extras stated in the breakdown are only 77 EUR.

    I agree, ‘free’ tickets with BA are a joke and miles are better spent on upgrades, when one can find these.


    RichHI1
    Participant

    Disgusted, no criticism intended, I was referring to the general view on these forums rather than the posters on this specific topic that BA are not the most price competitive of airlines. This troubles many as they are unwilling to travel on other mainstream foreign carriers be they AF/KL, EK, AA, JL etc…

    As regards miles value it is all of my own choice. I am an AA EXP and I find their FFB plan excellent for free travel and upgrades. I just wanted to go on BA once more before the 744’s are retired and I have a lesiure trip back to US where I am not connecting through LAX so I can put up with the appalling TBIT CBP, so that is why I am on BA paying the surcharge. What bugged me was trying to swap from the 12.00 noon to 3.15 pm flight they suddenly want another 50 pounds. What I find immoral is there is no fare change they put it in the fees and taxes bucket precisely so they can destroy value in the FFB plan.
    I think this situation will change eventually as One World and the Joint Venture progress. My fear is the British Airways guys will destroy the value in the AAdvantage Plan and the AA accountants will remove all the value from the BA in flight service and lounges (note access for EC has already been cut back since JV started)


    continentalclub
    Participant

    Binman62 – you mention above that ‘[YQ on BA]remains only because it allows BA to charge it on redemption tickets using miles that have already been subject to such surcharges.

    Although I’m not privy to the numbers, I’d speculate with some conviction (if that’s possible!) that YQ’s continued presence is barely even considered in airline revenue departments with reference to mileage redemptions.

    The far more compelling pressures are likely to come from two other factors:

    The first is likely to be that YQ, on the majority of (if not all) airlines, is not part of any corporate fare agreement; it is always an adjunct-to. So, those airlines who offer negotiated fares are likely to retain YQ as it is never included in the discounting calculation. Those airlines who have little or no exposure to this market are, in general, less likely to show YQ as a separate line in the fare calculations.

    Secondly, and almost completely hand-tyingly, is that YQ tends to be relied on by the airlines that have exposure to those jurisdictions which do not mandate the advertising of fully-inclusive fares to the retail market – like the USA. Accordingly, it would be commercially suicidal for BA to include YQ in their base fare calculation, as long as, say, Delta, is allowed to promote fares in the US excluding taxes, fees and charges. Until US consumer regulation is updated to match the EU’s in this regard, no sane carrier would put themselves in the position of apparently making their advertisable prices uncompetitive. Just do a fare search on Orbitz for a really clear representation of exclusive and inclusive prices and how they skew the comparison tables.

    The additional, anecdotal, evidence to suggest that redemptions aren’t the main concern is that the Air Miles scheme in the UK does not charge TFCs at all (although it does still offer co-pay options). If YQ was such a revenue-earner for redemptions, then surely one would expect Air Miles to rely on this income to support its business model. It doesn’t and therefore I’m reasonably sure that neither does KLM nor BA.

    Further, while many airlines do indeed charge YQ on top of the base cost of mileage redemptions, these are usually the carriers that don’t charge other extraneous fees for ‘ticketing’ etc. Such fees are more prevalent with in the schemes of some (especially North American) carriers who don’t levy YQ on redemptions.

    Of course, the presence of any kind of supplementary fee on top of an Economy redemption on almost any carrier, particularly those reserved in advance when discounted revenue tickets are available, usually renders such redemptions very poor value* – as we all know.

    However, whether the fees are for ‘ticketing’, or ‘security’ or ‘co-pay’ or ‘breathing’ or ‘YQ’, I still personally find it amazing that many of us are able to fly First Class from London to Vancouver for £472.63 return.

    Back to the OP’s point though, and while I’m not defending it in any way, YQ is clearly likely to be very attractive to many airlines because of corporate contracts (which may make up tens of % of total business) and loose advertising laws, rather than redemptions (which probably make up less than 1% of that business).

    *I am however grateful, more regularly than occasionally, for the presence of BA redemption availability in Economy on domestic and shorthaul flights at very short notice – like within 2hours – and at times when revenue fares are very high. I’m sure that it doesn’t take very many of those redemptions to be enjoyed to build loyalty and, if it’s the company’s dollar that’s being saved, to even amortise the odd higher fare charged by BA on other flights. So, when a £220 fare costs £38 including YQ, I’m more likely to be grateful for the £182 saving than I am peeved about the £38 residual cost – especially when I can earn further BA Miles and companion vouchers relatively painlessly through careful spending, charging and connection of loyalty programmes allowing transfers-in to BA Miles.


    RichHI1
    Participant

    continentalclub you make two very valid points and one I am not clear on.

    The manipulation of YQ enables the airlines to quote cheap corporate deals to win plaudits for purchasing and then take it back from those corporations under the covers. As this has greatest effect in coach and with recent cut backs more and more corporations are bullying staff into coach travel I suspect the argument is gaining strength. It may be our saving grace that the more this is discussed the more commerical pressure there will be from corporations to stop this loop hole.

    Second point, the BA charging structure means that AA EXP’s can always find availability on a route that has BA as well as AA. AA are playing a clever game, Revenue dept is cutting back on Premium cabin inventory on key transatlantic routes to try to increase loads, knowing that because of the YQ “effectively a co-pay) BA long term availability will be there in plenty. Try booking LHR-LAX or LHR-JFK a long time out in First and see what comes up. So in a way for what is in comparison to the first fare a small sum you get enhanced availability.

    As regards your third point I am not sure I agree with you. If you book on Delta website or American or most other US airlines you get a full fare quoted including all taxes and charges. Some airlines display print and tv commercials with a from price which may have taxes and extra charges added but they tend to be the Low Cost carriers and I suggest that UK and European Low Costs do something very similar. There are disocunt travel sites which can be tricky but the airlines are trying to fix that as we speak. The US has traditionally displayed prices without tax as tax payment on purchase is often State based and depends on the point of transaction. This is a legal requirement rather than a consumer protection issue. In many ways the US has better protection for passengers through the use of the legal system than the EU though the EU certainly blazed the trail for delay and cancellation penalties which the US has only just followed up with.

    If it is such a miniscule factor then why do not BA do what JAL does? They have a fuel surcharge on normal tickets but Award Free Tickets are free. That way you keep your revnue from corporations and you get increased loyalty from your FFB members who think you seem them as more than a revenue opportunity (no matter how false that assumption may be in the real world).


    craigwatson
    Participant

    and where has that policy got JAL now?

    I dont think ANY airline wants to emmulate JAL


    continentalclub
    Participant

    RichHI1 – look at almost any print or TV advert in the US, or listen to any radio one; air fares are always, always quoted on an exclusive basis. This is not about no-frills carriers; this applies to everyone from Air Canada to United to BA. And this is not about the web; it’s about traditional media. It’s also not about state sales taxes; it’s about internationally-accepted structures for airfare calculations.

    And since those structures are globally-utilised, then they have to reflect the global competitive environment in which the relevant carriers operate. If Delta and BA included YQ in their base fares then they’d immediately shoot themselves in the competitive foot in this hugely important media environment.

    So, since the law permits the promotion of exclusive fares in the US and elsewhere, it’s almost inconceivable that any carrier with a desire to survive would ever quote their fares in offline media on an inclusive basis. What possible incentive would there be to do so?

    In Europe, by contrast, Ryanair can promote its lack of YQ because it a) doesn’t advertise nor derive significant incomes from jurisdictions where it is legal to promote exclusive prices and b) doesn’t load fares on to Global Distribution Systems. If it were operating in the US, or utilising GDS, then things may be very different.


    RichHI1
    Participant

    Craig I quote JAL simply as a One World Airline National Flag Carrier. You and I both know that the Japanese aviation market is very complex it would be rash to ascribe JAL’s position to not imposing YQ on award redemptions. I would suggest that many airlines could do well to emulate JAL and ANA when it comes to First Class Service and quality lounges (Yes SIN and CX are good too).


    RichHI1
    Participant

    and yet it is BA charging YQ not American…


    continentalclub
    Participant

    Fare (A1): AA NYCLON H2 fare (rules) , psgr type ADT $724.00
    Tax: AA YQ surcharge $181.00
    Tax: US International Departure Tax $16.30
    Tax: US September 11th Security Fee $2.50
    Tax: US Passenger Facility Charge $4.50
    Total for 1 adult passenger: $928.30
    (as of Saturday, June 25, 2011 12:13pm)


    RichHI1
    Participant

    I feel we are going round in circles. Without reprinting the whole topic, I refer to reward tickets. AA charge non elites some fees for telephone booking, some fees for other things like bags etc in coach but no YQ (on Premium Cabin tickets) whereas on BA metal you have to pay and if you ever you change a booking apparently pay again.


    Binman62
    Participant

    Continental club…..can’t much argue with a lot of what you said other than that it costs just £472 to fly First. You must factor in the price paid for each of the 150,000 miles.


    continentalclub
    Participant

    My apologies RichHI1; I was responding to the discussion relating to the advertising of revenue fares in the USA exclusive of YQ and other charges, and upon which basis I read your subsequent response suggesting that AA does not charge YQ.

    The comparison between AA and BA in terms of redemptions remains somewhat moot however, since the schemes differ in earning and burning rates, opportunities to earn and types of reward available.

    Whilst I accept that it is an entirely subjective viewpoint, and not one that I would wish IAG to take as an encouragement to push the envelope of acceptance further, I would far rather be a member of BA’s Executive Club and earn miles from flying, shopping, fuelling, staying etc., etc., as well as spending on my AmEx and earning companion vouchers – than I would be a member of AAdvantage and avoid YQ but earn miles more slowly and (with one or two exceptions where a companion voucher is not available) need more miles to redeem for comparable flights – which I tend to take on a leisure basis as part of a couple. Taken in the round, the YQ ‘saving’ on AA is dwarfed by the additional value (to me) in the BA programme.

    Your mileage, as they say, may vary!


    RichHI1
    Participant

    continentalclub, the apologies are mine.

    I can understand with a UK presence that you would find BA EC preferable both from a miles earning perspective and also because BA is the prime carrier on most ex LHR routes. As BA do not operate in Hawaii the reverse is true for me.

    What I value most about being an elite (Gold Card / Premier in BA speak) in AAdvantage is the level of service you get, whether it be from one of the US centers or when in UK from the wonderful Irish center.

    I would love the JV to take on the best of the three airlines but as a European colleague said when AF/KL merged ” Amazing – now we will have French punctuality and Dutch food…”

Viewing 15 posts - 16 through 30 (of 31 total)
You must be logged in to reply to this topic.
Business Traveller March 2024 edition
Business Traveller March 2024 edition
Be up-to-date
Magazine Subscription
To see our latest subscription offers for Business Traveller editions worldwide, click on the Subscribe & Save link below
Polls