Operations

Airline Fuel Surcharges Down, But Not Cost of Tickets

Posted on November 12, 2008 by LCT Staff - Also by this author - About the author

WASHINGTON, D.C. – Airlines last week eliminated or significantly lowered fuel surcharges for tens of thousands of domestic fares, but consumers are not paying less for most tickets.

An analysis by FareCompare.com at USA TODAY's request reveals that many airlines folded the amount of the surcharge into the airfare, so for most tickets, travelers are paying the same as before the change. "We have seen a tectonic shift in domestic airfares, but it's not great news for consumers, because the major airlines have, for the most part, simply shifted the surcharge amount into the base airfare," says Rick Seaney, CEO of FareCompare.com.

Until last week, many airlines' domestic airfares had fuel surcharges — except where they compete with Southwest or another discount carrier that doesn't have them. Last week, American eliminated most domestic surcharges and reduced many others. Competitors followed. Most international tickets still have fuel surcharges ranging from $200 to more than $500. On Nov. 5, 75% of American's 65,000 domestic fares had no surcharge, compared with 32% on Sept. 18, according to FareCompare.com. Nearly 6,000 of American's domestic fares on Sept. 18 had a $200 surcharge; four did on Nov. 5.

Most surviving high surcharges are on Hawaii routes. On Nov. 5, American had 4,000 domestic coach or first-class fares with a $280 surcharge; Delta had 6,000 with a $289 surcharge. Many fares have absorbed the surcharges.

For example, on Nov. 1, American's base fare was $680, plus a $170 fuel surcharge, for a round-trip, 14-day advance-purchase ticket between Dallas/Fort Worth and Washington, D.C. The ticket's cost before government and airport fees was $850.

On Nov. 6, the same ticket cost $850 with no fuel surcharge. The airlines' moves provide "a bit more transparency" in prices, Seaney says, but the wide range of surcharges also shows that the run-up in domestic fuel surcharges the past year "had everything to do with competition and the need to raise ticket prices."

Airlines say they began the fuel surcharges because they were hit by record fuel costs. The industry projects it will lose billions of dollars this year.

US Airways spokeswoman Valerie Wunder says the full price of a ticket — not the surcharge — matters.

"We still need to be able to charge enough for our product to be profitable, and we aren't there yet."

Aviation consultant Michael Boyd says the changes are not deceptive. This year is "a financial disaster" for airlines, so "shifting the name from 'fuel surcharge' to 'fare' is not ripping the public off," he says.

Source: USA Today

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