skyhigh
Posts: 123
Joined: Sun Nov 06, 2005 6:37 pm

Why Are We Still Paying The Recent Fuel Surcharges

Tue Oct 10, 2006 4:54 pm

Watching the news last night, it showed a graph of the price of jet fuel. The price now is as low as it was back in June, well before the additional and excessive surcharges introduced by Qantas on 1st September and by Virgin Blue around the same time.
Those surcharges were added in direct response to the sudden leap of jet fuel at that time and should now be removed, in line with the current price of fuel.

I know that this is not just a problem related to Australasia and is a global issue.

These days it seems that once a tax/surcharge/levy (is there a difference?  Confused) is introduced, it is there for good regardless of its relevance.

Fed up!  Angry
 
acidradio
Crew
Posts: 1595
Joined: Mon Mar 12, 2001 3:19 pm

RE: Why Are We Still Paying The Recent Fuel Surcharges

Tue Oct 10, 2006 5:10 pm

Think of all the months (years!) when the airlines did not charge any fuel surcharge before all of this. They still have a way to go...

Airlines are not a regulated public utility. If my electric utility wants to raise rates, they have to have the increases improved by the government. If NW wants to charge me more to fly somewhere, I'm stuck with it.
Ich haben zwei Platzspielen und ein Microphone
 
ZRHnerd
Posts: 830
Joined: Tue Jul 05, 2005 8:20 pm

RE: Why Are We Still Paying The Recent Fuel Surcharges

Tue Oct 10, 2006 5:10 pm

This has been discussed in a number of threads already.  Smile
 
ANother
Posts: 1833
Joined: Thu Nov 03, 2005 2:47 am

RE: Why Are We Still Paying The Recent Fuel Surcharges

Tue Oct 10, 2006 7:28 pm

From here the spot price for kerosene is still $75.1 and the average price for 2006 is $83.6/b. The industry will pay an additional +$24 billion more in 2006 than in 2005.

Why are you still paying that surcharge? I would suspect the airlines are trying to make up that $24 billion, and also to make some profit (which they are not very good at doing, at the best of times)

Fed up? Take the train.
 
utapao
Posts: 546
Joined: Sat Jul 09, 2005 10:19 pm

RE: Why Are We Still Paying The Recent Fuel Surcharges

Tue Oct 10, 2006 9:40 pm

Quoting Acidradio (Reply 1):
Think of all the months (years!) when the airlines did not charge any fuel surcharge before all of this. They still have a way to go...



Quoting ANother (Reply 3):
Why are you still paying that surcharge? I would suspect the airlines are trying to make up that $24 billion, and also to make some profit (which they are not very good at doing, at the best of times)

And they SHOULD be able to recoup those costs... but by increasing fares, NOT adding 10 taxes/surcharges to the advertised fare. This is where the flying public struggles with understanding airfares.

Bottom line is "what is the cost of the flight and what does the airline need to charge to be competitive... or God forbid... be profitable".

If the airlines need to offset fuel increases, landing fees at certain airports, government-imposed security taxes, etc., or any route/country-specific surcharges, then the cost of the ticket should be $ZZZ, not $XXX (+ $YYY). If fuel goes up, raise the fare.... if it goes down, lower the fare... or keep it the same and make more profit.

At least with auto fuel, cigarettes and almost any other item, if the company incurs additional costs and/or taxes, the advertised cost of the item goes up to offset that. Let's say cigarettes are $25/carton. Imagine seeing them on the shelf for $8.00 carton of cigarettes but when you get to the checkout counter it is $8.00 + $3.00 + $7.00 + $4.00 + $3.00.

I've been in this industry and even air pricing for 30 years. But as a consumer, nothing is more frustrating than seeing a DFW-LGW advertised fare of $375, but when you get around to making plans and go to price it, the actual total is $525.
Sawasdee khrab!
 
goaliemn
Posts: 320
Joined: Fri Sep 02, 2005 9:46 pm

RE: Why Are We Still Paying The Recent Fuel Surcharges

Tue Oct 10, 2006 9:48 pm

Quoting Skyhigh (Thread starter):
Fed up!

The surcharge wasn't added the day fuel went up. It was added after it had gone up and stayed up for awhile. The surcharge isn't going to disappear immediately either. It takes time to make sure fuel isn't going to surge back up, plus it takes some time to adjust fares.
 
ANother
Posts: 1833
Joined: Thu Nov 03, 2005 2:47 am

RE: Why Are We Still Paying The Recent Fuel Surcha

Tue Oct 10, 2006 9:59 pm

Quoting Utapao (Reply 4):
And they SHOULD be able to recoup those costs... but by increasing fares, NOT adding 10 taxes/surcharges to the advertised fare. This is where the flying public struggles with understanding airfares.

OK, so the issue isn't if an airline tries to recoup some (and I emphasise some) of these increased costs, its how they do it. I tend to agree that I would prefer the airlines to include all the costs in the prices but that isn't quite so simple.

Simple example QF serves the LHR - Australia market via three main routings (in addition to interline) via HKG, SIN, BKK. The distances involved are different, so the fuel burn is different. Do we want variable fares depending upon the routing? To the customer they are buying end-to-end and would be surprised to see different fares for different routings. Taxes and fees are different at each of the three airports. How do you incorporate these into the through fare? An average amount? Well then sum A.nutter will complain that they travelled through el-cheapo airport and shouldn't have to pay an average fee. In this case separate amounts, added to the fare is reasonably easy.

Anyway - rather than complain on the taxes not being included in the fare, shouldn't we be complaining about the taxes and charges themselves. IMHO I resent having to pay an 'airport improvement fee' for some future expansion of a monopoly provider, when it is unlikely that I will ever benefit.
 
swissy
Posts: 1481
Joined: Fri Jan 07, 2005 11:12 pm

RE: Why Are We Still Paying The Recent Fuel Surcharges

Tue Oct 10, 2006 10:09 pm

Quoting Utapao (Reply 4):
And they SHOULD be able to recoup those costs... but by increasing fares, NOT adding 10 taxes/surcharges to the advertised fare. This is where the flying public struggles with understanding airfares.

Agree 1000%
Fuel Surcharge is or should be a short term solution to give the airlines a tool to adjust pricing easy and fast..... however it is not my problem if an airline does lousy business and the easiest way is just leave the fuel tax and lets get out of red.
Governments should look closer to these practises and force them to adjust the ticked prices..... also called false advertisement, oh look a fare for 99$ and you end up paying double...... with all these "extra BS" taxes and charges.

Quoting ANother (Reply 6):
IMHO I resent having to pay an 'airport improvement fee' for some future expansion of a monopoly provider, when it is unlikely that I will ever benefit.

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Cheers,
 
georgiaame
Posts: 949
Joined: Sat Aug 13, 2005 7:55 am

RE: Why Are We Still Paying The Recent Fuel Surcha

Tue Oct 10, 2006 10:48 pm

Because it is not a fuel surcharge in the first place. It is an added charge that passes for a fuel supplemental charge and it allows the airlines to keep their prices high.

Raise an airfare by 10 dollars, and most everyone does the same, until one airline, typically NW, refuses to go along, and the others back down. No one backs down if they can pretend it is for fuel. And this charge is significantly greater than $10 on a low priced ticket. In fact, sell 200 seats on a given flight, and charge $75 supplement per seat per direction, and you have increased your revenue by $15,000 without blinking an eye. Not bad, and much better than $2000. True, some of that money ultimately pays for gas, but most of it will get banked.

Flamers, be advised, I have no problem with prices being artificially elevated. In a market economy, they can charge as high or as low a fare as they chose, and bear the market consequences. Too low a fare, everyone wants to fly, you fill your seats, and empty your bank account. (Think Delta, a few years back) Too high, people flock to the competition, and you fly with empty seats and still empty your bank account. (Think my upcoming flight to London on Continental for a $360rt fare, taxes, supplements included, vs $750 that Delta wanted for the same route) Hit a sweet spot, you fly full, and make a profit. (Think Singapore Air.)

Airfares are determined by a computer with a Byzantine mindset, programmed by a Middle Eastern Souk merchant. That's why the "surcharge" has not disappeared, nor will it ever.
"Trust, but verify!" An old Russian proverb, quoted often by a modern American hero
 
bond007
Posts: 4423
Joined: Mon Mar 14, 2005 2:07 am

RE: Why Are We Still Paying The Recent Fuel Surcharges

Tue Oct 10, 2006 10:50 pm

Quoting Utapao (Reply 4):
And they SHOULD be able to recoup those costs... but by increasing fares, NOT adding 10 taxes/surcharges to the advertised fare. This is where the flying public struggles with understanding airfares.

Bottom line is "what is the cost of the flight and what does the airline need to charge to be competitive... or God forbid... be profitable".

My exactly thoughts....well said!

Quoting ANother (Reply 6):
I tend to agree that I would prefer the airlines to include all the costs in the prices but that isn't quite so simple

I believe it is. It's not a coincidence that those few airlines that have very simple (and dare I say, logical) pricing programs, are the few airlines that continue to make profits.

Quoting ANother (Reply 6):
To the customer they are buying end-to-end and would be surprised to see different fares for different routings. Taxes and fees are different at each of the three airports. How do you incorporate these into the through fare? An average amount? Well then sum A.nutter will complain that they travelled through el-cheapo airport and shouldn't have to pay an average fee. In this case separate amounts, added to the fare is reasonably easy.

That is almost contradictory. The end result is that the total fares are different. I can guarantee that most passengers have no idea what the separate fares and taxes, fees are. They just see the total price as $500.

Jimbo
I'd rather be on the ground wishing I was in the air, than in the air wishing I was on the ground!
 
utapao
Posts: 546
Joined: Sat Jul 09, 2005 10:19 pm

RE: Why Are We Still Paying The Recent Fuel Surcharges

Tue Oct 10, 2006 10:50 pm

Quoting ANother (Reply 6):
Simple example QF serves the LHR - Australia market via three main routings (in addition to interline) via HKG, SIN, BKK. The distances involved are different, so the fuel burn is different. Do we want variable fares depending upon the routing? To the customer they are buying end-to-end and would be surprised to see different fares for different routings. Taxes and fees are different at each of the three airports. How do you incorporate these into the through fare? An average amount?

Anyway - rather than complain on the taxes not being included in the fare, shouldn't we be complaining about the taxes and charges themselves

But that gets back to the cost of flying SYD-LHR is $XXX. When you purchase any other product, you do not see the item-by-item breakdown. If QF charged $1,000 for the route, it does not matter whether they fly through BKK or SIN, or what taxes are involved. Their cost for that market is $1,000, and they definitely have the tools to come up with the market costs.

Quoting ANother (Reply 6):
IMHO I resent having to pay an 'airport improvement fee' for some future expansion of a monopoly provider, when it is unlikely that I will ever benefit

Agreed. And an airport improvement fee should NOT be part of an air carrier's ticket. But if it is, it is still part of the costs of serving that market and should be rolled up.

Quoting Swissy (Reply 7):
Fuel Surcharge is or should be a short term solution to give the airlines a tool to adjust pricing easy and fast..... however it is not my problem if an airline does lousy business and the easiest way is just leave the fuel tax and lets get out of red.

But it gets back to free competition. Governments should not be setting fares, but they should be monitoring taxes, etc. Again, the total cost to operate the flight is bottom line. Not some costs are included and others are identified as taxes or fees.

If an airline can charge more than another and get away with it (and stay in business), it does not matter why they charge that. The public will either support them and pay those costs, or they will go to carriers with lower fares.

We cannot continue thinking like airlines in the '60s.
Sawasdee khrab!
 
swissy
Posts: 1481
Joined: Fri Jan 07, 2005 11:12 pm

RE: Why Are We Still Paying The Recent Fuel Surcharges

Tue Oct 10, 2006 11:16 pm

Quoting Utapao (Reply 10):
But it gets back to free competition. Governments should not be setting fares

Agree 100%, however a so called "fuel surcharge" is in my opinion temporary
charge... The list of all the extra cost is getting longer and longer or how about why not just itemise the whole ticked............

Quoting GeorgiaAME (Reply 8):
And this charge is significantly greater than $10 on a low priced ticket. In fact, sell 200 seats on a given flight, and charge $75 supplement per seat per direction, and you have increased your revenue by $15,000 without blinking an eye. Not bad, and much better than $2000. True, some of that money ultimately pays for gas, but most of it will get banked.

 checkmark 

Cheers,

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