Flight fuel surcharge

Barman

Hi everyone. New to the forum so I thought I'd kick off with fuel prices. Have we heard of flight surcharges dropping with the reduction in fuel prices?

SW17

Welcome to MSE.

Don't hold your breath. Most airlines hedge majority of fuel costs well in advance, so short term volatility doesn't impact them too much (positively or negatively). The few that don't will probably be taking some profit, as the "hedgers" can't cut price yet. Maybe some impact next time they hedge.

The "fuel surcharges" introduced by mainly legacy carriers a few years ago now seem to have become just another part of the fare in many cases, not sure how much they actually reflect fuel as part of the cost anymore. Hard to tell, unless there is someone from airline revenue management on here.

callum9999

They aren't fuel surcharges any more, nor have they been for ages. They are carrier surcharges and can be as high as they want regardless of fuel costs.

It's a bit naive to think airlines will cut prices because their costs were cut anyway. If people were happy paying £69 before, why would they cut that? They may be quicker to match sales/have more generous sales etc. - but the base price won't be dropping.

fifeken

callum9999 wrote: »

They aren't fuel surcharges any more, nor have they been for ages. They are carrier surcharges and can be as high as they want regardless of fuel costs.

It's a bit naive to think airlines will cut prices because their costs were cut anyway. If people were happy paying £69 before, why would they cut that? They may be quicker to match sales/have more generous sales etc. - but the base price won't be dropping.

If you get a fare breakdown, a large percentage of the carrier's bit will be coded "YQ" which is the most common code for fuel surcharge.

IATA is expecting a 5% cut in base fares due to efficiency improvements.

http://www.iata.org/pressroom/pr/Pages/2014-12-10-01.aspx

callum9999

fifeken wrote: »

If you get a fare breakdown, a large percentage of the carrier's bit will be coded "YQ" which is the most common code for fuel surcharge.

IATA is expecting a 5% cut in base fares due to efficiency improvements.

http://www.iata.org/pressroom/pr/Pages/2014-12-10-01.aspx

It was the most common code for fuel surcharge, it is now the most common code for carrier-imposed surcharge. There may be a couple still describing it as a fuel surcharge but I'm not aware of them.

IATA can expect all it wants, doesn't mean it's going to happen. Increased efficiency gives them more lee-way to cut fares if they're experiencing stiff competition on a certain route. If they don't face that competition then why cut the fare?

slinga

Dunno if this is correct but I read somewhere that 30% of a ticket price is cost of fuel.

With a 50% drop in oil price doesn't that equate to a overall 15% drop in ticket price???

It'll never happen though.

fifeken

callum9999 wrote: »

It was the most common code for fuel surcharge, it is now the most common code for carrier-imposed surcharge. There may be a couple still describing it as a fuel surcharge but I'm not aware of them.

Yes, they can change the name, but when you dig down, most of it is still Fuel Surcharge. I've just done some dummy bookings on a few of the legacy airlines . With a bit of digging you can track down YQ (or YR in the case of CX) as being primarily Fuel Surcharge

callum9999 wrote: »

IATA can expect all it wants, doesn't mean it's going to happen. Increased efficiency gives them more lee-way to cut fares if they're experiencing stiff competition on a certain route. If they don't face that competition then why cut the fare?

Agree that no airline will cut a fare if they don't have to, but with ever increasing competition from the LCCs and the ME especially, I think UK airfares will continue to be pressured downwards.

SW17

If you are looking for reduced air prices as a result of lower fuel costs, look at the total cost, not the surcharge (whatever it may be called now). Airlines have their own reasons, usually related to travel agency commissions (where these exist), corporate discounts and miles redemption fees, for keeping the "surcharges" higher and lowering the base price.

If the overall price comes down, be happy and don't analyse too much. As I posted above, fuel cost hedging policies mean that airline reaction to oil prices is not instant, they are not petrol retailers.

stewgreen

1. Accept the point about hedging
2. Good point about should they drop price
3. Biz has to make a profit
BUT if you label a product something that it isn't, that is misrepresentation.
- If in June had bought product #1 a December flight ticket for £250 plus product #2 a fuel surcharge for £50. It is reasonable for me to expect to get my £50 back if I find the airline paid 2011 prices for the fuel in my flight. ie I paid for a fuel surcharge which I never got.

Caz3121

stewgreen wrote: »

- If in June had bought product #1 a December flight ticket for £250 plus product #2 a fuel surcharge for £50. It is reasonable for me to expect to get my £50 back if I find the airline paid 2011 prices for the fuel in my flight. ie I paid for a fuel surcharge which I never got.

Can you advise which airline includes something they call "fuel surcharge"
BA have "Carrier imposed charge"
Virgin have "Carrier imposed surcharges"
I think most other airlines have stopped referring to "fuel surcharge" as, whilst that was a great title to justify an additional charges when fuel prices were high but now they have removed any link between their "additional charges" and fuel prices as even with hedging it is less justifiable

budgetflyer

They can call it what they like and make it as high or low as they want.i am only interested in the end price, what it costs me to fly.