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Frequent flyers hit as airline surcharges fly high despite slump in fuel prices

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whatmeworry

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I know this topic has been done before, but seeing that fuel prices has fallen to to four year lows, airlines have not dropped the cost of fuel surcharges.

Passengers will be wishing Australia had taken a leaf out of Hong Kong's book before the Christmas holidays, the busiest flying time of the year.
Since January, the Chinese territory's aviation regulators have forced Qantas and other airlines to drop passenger fuel surcharges on long-haul flights by almost a third to $HK628 ($95).

But in Australia, Qantas and Emirates have kept their fuel surcharges on international flights intact, despite a 25 per cent fall in jet fuel prices since the start of the year.
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Australia's largest travel agent, Flight Centre, has renewed its calls for the airlines to remove the surcharges, which hit travellers redeeming frequent-flyer points hardest.
"I can guarantee you that it is designed by accountants who have no moral fortitude," Flight Centre managing director Graham Turner said.


 

stryker

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Well, it's a competitive business (in many places, at least).
 

Himeno

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Places like Hong Kong and Japan have regulated fuel surcharges. Airlines are required to charge that amount on flights from those territories and no more. For other places with no such government review of surcharges, the airlines charge whatever they want.
 

mel-world

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Yes... but it is starting to get a little like the Bank interest rates where any increase is charged from the day but any fall takes forever (or never) to get reduced. I wonder who will be first to admit that their fuel surcharges are starting to be difficult to justify. I guess, not before the Christmas/New Year peak period.
 
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Aussie_flyer

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It is incredibly pathetic that the surcharges remain so high. I think HK has it right in this regard
 

markis10

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Keep in mind that jet fuel pricing is not tied to crude, while crude has dropped some 30+% over the year Jet A1 is only down 20%, of course that should mean fuel surcharges at least follow the A1 trend in the theory world.

14 Nov 2014Share in World Indexcts/gal$/bbl$/mtIndex Value 000= 100vs. 1 week agovs. 1 month agovs.1
yr ago
Jet Fuel Price100%231.597.2766.3265.8-5.3%-3.5%-20.2%
 

JohnK

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The airlines keep doing this all the time.

Cry poor when fuel prices go up and immediately increase fuel surcharges. And then ignore calls to reduce fuel surcharges when fuel prices go down.

Why is the Australian government gutless? I shouldn't have to pay a fuel surcharge using points I have earned flying.
 

dajop

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The airlines keep doing this all the time.

Cry poor when fuel prices go up and immediately increase fuel surcharges. And then ignore calls to reduce fuel surcharges when fuel prices go down..

It's more nuanced than that for QF. When fuel prices go up a rising AUD is ignored. When fuel prices come down the excuse for not putting surcharges down is that the AUD has also dropped.
 

defurax

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I also presume some airlines will still pay higher prices for their fuel depending on the Forex and fuel hedging strategy they've adopted. If I remember correctly one of the US airline was paying fuel 15% cheaper than the competition around the start of the GFC due to some lucky/smart hedging strategy.
 

vitagen

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Even if QF lower the fuel surcharge, they will just up the base fare component. Would work out better for redemption tickets though
 

clazman

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also have to factor do the airlines have a fuel contract in place where the price is preset for x months / years? where they have tried to hedge their bets on fuel increases rather than decreases
 

dajop

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Even if QF lower the fuel surcharge, they will just up the base fare component. Would work out better for redemption tickets though

Fuel surcharges are irrelevant to many revenue fares anyway, where prices are set according to market conditions - they tend not to go up when fuel surcharges rise (base fare goes down) and tend not to go down when fuel surcharges fall (base fare goes up). The effects are most noticeable on award tickets and round the world/circle tickets. Maybe also higher corporate type fares.
 

codash1099

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also have to factor do the airlines have a fuel contract in place where the price is preset for x months / years? where they have tried to hedge their bets on fuel increases rather than decreases

Don't recall that applying when prices were going the other way but maybe I'm cynical (loud cries of NO! NEVER! from the gallery).
 

CMA222

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Maybe this needs to be approached like the class actions against the banks for overcharging on penalties or service (!!) fees. The courts have said the charge needs to reflect the true cost and not be a profit opportunity. I expect one of the "class action specialist" law firms would be prepared to have a look at it. It could have flow through effects to all airlines. Sure the end result would be they would put up base fares but at least the "carrier imposed charges" would no longer be misleading for the travelling public.:shock:
 

serfty

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It no surprise that QF's most recent financials were blackish rather than reddish.

Anyway why should the government step in?

People can choose not to fly on airlines / fates afflicted with fuel fines ... or at least those fares with least all up cost.
 

MEL_Traveller

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Maybe this needs to be approached like the class actions against the banks for overcharging on penalties or service (!!) fees. The courts have said the charge needs to reflect the true cost and not be a profit opportunity. I expect one of the "class action specialist" law firms would be prepared to have a look at it. It could have flow through effects to all airlines. Sure the end result would be they would put up base fares but at least the "carrier imposed charges" would no longer be misleading for the travelling public.:shock:

The key word in your post is 'penalty'.

In a contract, penalties are prohibited. Liquidated damages are allowed.

A penalty is likely to be determined where the stated cost for the breach of contract bears no correlation to the actual cost incurred. Liquidated damages on the other hand are more likely to reflect actual costs, and therefore allowed.

Fuel surcharges aren't a penalty.
 

JohnK

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Even if QF lower the fuel surcharge, they will just up the base fare component. Would work out better for redemption tickets though
Nothing wrong with including the fuel surcharge in the base airfare. In fact that is where it belongs.

Weren't fuel surcharges a temporary measure in 2004? Now 10 years later and they are still here.
 
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