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aug 31 2009

Should "fuel" surcharges be renamed "profit" surcharges?

Everyone seems to have noticed that fuel prices have come down an awful lot since summer 2008. Everyone except the airlines, anyway, most of whom continue to slap "fuel surcharges" on plane tickets, even with peak summer travel season at an end.

David Rowell recently asked the question in one of his e-mail newsletters. The Travel Insider is upset by the so-called "fuel surcharge" that British Airways and other airlines charge. He recently cashed in frequent flier miles for a British Airways flight for a free ticket, and the company demanded he pay $418 to cover the addtional costs of fuel over and above the ordinary jet fuel cost.

David's annoyed for two reasons. Why is he paying $418 (plus taxes and fees) for a "free" ticket. That takes all of the fun out of earning frequent flier miles.

Plus, David suspects that BA is lying about the true cost of the fuel.

"Who knows what their 'normal' fuel cost would be, so we can't be sure what their extra cost is…. It is, of course, not a fuel surcharge, but rather a profit surcharge."
But David thinks the airline is paying something more like $65 for his part of the fuel cost on a Seattle to London roundtrip, leaving the airline with a $385 profit.

To be fair to British Airways, it would likely say it can't possibly be gouging customers because it has had its worst financial year ever, losing about $640 million over 12 months.

UPDATE: 9/2: I asked a BA spokesperson for his reaction:

We pay our fuel charges in U.S. dollars, and in the past year, the dollar has weakened against the pound and we wind up taking a beating having to exchange pounds to dollars to pay for fuel. Thus our costs are still very high.

It should be noted that last winter, as the price of jet fuel fell, British Airways cut the price of its fuel surcharge accordingly. We cut the surcharge by as much as a third on our longhaul services from Thursday December 18. The move reflects the reduction in the price of oil and the airline's fuel hedging policy for 2009/10. For World Traveller flights lasting more than nine hours, that means a reduction of £30 per sector to £66. On flights of less than nine hours a reduction of £15 per sector to £53.

What do you think about fuel surcharges?

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Note:This story was accurate when it was published. Please be sure to confirm all rates and details directly with the companies in question before planning your trip.

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