Beaucaire
Topic Author
Posts: 3888
Joined: Sun Sep 14, 2003 4:48 am

Oil At 52$/barrel -no Drop In Surcharges...

Mon Jan 15, 2007 11:29 pm

The last months have seen a steady and significant drop in oil-prices.
None of the major airlines though has passed that on to their consumers.
Literally all fuel-surcharges have remained at their level-are we being exploited ???
Please respect animals - don't eat them...
 
fr8mech
Posts: 6602
Joined: Mon Sep 26, 2005 9:00 am

RE: Oil At 52$/barrel -no Drop In Surcharges...

Mon Jan 15, 2007 11:39 pm

No, you are not being exploited. If any entity still has a fuel surcharge in place, it's to offset the the fact that they did not enact a surcharge immediately.

I'd wager that most airlines didn't even count on $52 oil. They were hoping for something in the $40's.

If you feel you're being exploited, don't fly.
When seconds count...the police are minutes away.
 
swissy
Posts: 1481
Joined: Fri Jan 07, 2005 11:12 pm

RE: Oil At 52$/barrel -no Drop In Surcharges...

Mon Jan 15, 2007 11:45 pm

Quoting Beaucaire (Thread starter):
The last months have seen a steady and significant drop in oil-prices.
None of the major airlines though has passed that on to their consumers.
Literally all fuel-surcharges have remained at their level-are we being exploited ???

Yep agree, airlines are no better, "we" the traveling "milk cows" of the governments, airlines, oil companies they are just milking us dry.....  Angry IMO it is just a legal scam so they can recoup the loses because of bad decisions they made in the past....... but hey what can you do if you need to go from A to B....

Cheers,
 
flyorski
Posts: 725
Joined: Thu Dec 16, 2004 8:23 am

RE: Oil At 52$/barrel -no Drop In Surcharges...

Mon Jan 15, 2007 11:46 pm

You'd think that some airline would remove the surcharges to offer a cheaper ticket. Ryanair maybe??
"None are more hopelessly enslaved, than those who falsly believe they are free" -Goethe
 
TeamAmerica
Posts: 1540
Joined: Thu Sep 07, 2006 3:38 am

RE: Oil At 52$/barrel -no Drop In Surcharges...

Mon Jan 15, 2007 11:49 pm

The price of jet fuel does not immediately or proportionally follow the price of oil. Jet fuel is a refined product that has a supply/demand function somewhat separate from the price of oil. In short, the price of fuel should come down so long as the refineries provide sufficient supply. If there is not sufficient supply, then the price of jet fuel can increase even while oil falls.  Sad
Failure is not an option; it's an outcome.
 
User avatar
SLCUT2777
Posts: 3407
Joined: Sun Jan 01, 2006 12:17 am

RE: Oil At 52$/barrel -no Drop In Surcharges...

Mon Jan 15, 2007 11:52 pm

Quoting Flyorski (Reply 3):
You'd think that some airline would remove the surcharges to offer a cheaper ticket. Ryanair maybe??

WN still has hedges in place, and here in the states they (legacy carriers) are still so fresh off of years with losses in the gazillions, so dropping oil prices for the time being are just another way for airlines to re-coup some profits. That said DL especially could make-off like a profiteering bandit on the balance sheet for 2007 in that DL CFO Ed Bastian planned on oil being around $70-75 (USD) for the fiscal year.
DELTA Air Lines; The Only Way To Fly from Salt Lake City; Let the Western Heritage always be with Delta!
 
Bongodog1964
Posts: 3069
Joined: Wed Oct 18, 2006 6:29 am

RE: Oil At 52$/barrel -no Drop In Surcharges...

Tue Jan 16, 2007 12:12 am

As briefly mentioned above, airlines hedge their fuel costs; the result of this is that when oil goes up in price, the hedges are generally for a price lower thean the spot price, thus any increase in fuel costs is somewhat delayed.
The airlines continue to hedge when prices are high and thus are contracted to buy high priced fuel when the spot price has fallen. Therefore it takes a time for the benefit of the fall to work its way through. BA have cut £5 off some of their fuel surcharges recently.
 
Wsan581
Posts: 174
Joined: Sat Sep 23, 2006 11:52 pm

RE: Oil At 52$/barrel -no Drop In Surcharges...

Tue Jan 16, 2007 12:18 am

Quoting TeamAmerica (Reply 4):
The price of jet fuel does not immediately or proportionally follow the price of oil. Jet fuel is a refined product that has a supply/demand function somewhat separate from the price of oil. In short, the price of fuel should come down so long as the refineries provide sufficient supply. If there is not sufficient supply, then the price of jet fuel can increase even while oil falls.

 checkmark 

Here's a look at last weeks prices:

Thursday's (Jan. 11) closing fuel prices:
Crude oil was $51.88 a barrel, down $2.14 from the previous day. Jet fuel price was $66.38 a barrel, down $0.73.
Blue Skies Ahead!!
 
sacamojus
Posts: 186
Joined: Sat Dec 30, 2006 1:24 am

RE: Oil At 52$/barrel -no Drop In Surcharges...

Tue Jan 16, 2007 12:18 am

This is a case of simple economics, and is the same case for gasoline at the pumps. When the price of oil rises, gasoline immediately rises along with the price of oil. When oil falls, gasoline stays the same. Why? We still purchase the same amount of gas. Same with aviation fuel. As long as customers are willing to accept the fuel surcharges, then why lower them? Airlines are in the business to make money,and when demand does not change, there is no incentive to lower prices.
 
isitsafenow
Posts: 3413
Joined: Sun Feb 01, 2004 9:22 am

RE: Oil At 52$/barrel -no Drop In Surcharges...

Tue Jan 16, 2007 12:59 am

If you read the financials last Friday, the USA carriers raised fares by five bucks.
safe
If two people agree on EVERYTHING, then one isn't necessary.
 
Wsan581
Posts: 174
Joined: Sat Sep 23, 2006 11:52 pm

RE: Oil At 52$/barrel -no Drop In Surcharges...

Tue Jan 16, 2007 2:08 am

Quoting Isitsafenow (Reply 9):
If you read the financials last Friday, the USA carriers raised fares by five bucks.

I thought it was only AA/UA
Blue Skies Ahead!!
 
siromega
Posts: 564
Joined: Mon Sep 12, 2005 11:57 am

RE: Oil At 52$/barrel -no Drop In Surcharges...

Tue Jan 16, 2007 2:18 am

Quoting TeamAmerica (Reply 4):
In short, the price of fuel should come down so long as the refineries provide sufficient supply. If there is not sufficient supply, then the price of jet fuel can increase even while oil falls.

This is also why gas prices havent subsided much. Refineries are at 99% so the price wont come down until consumers start consuming less.
 
trekster
Posts: 4319
Joined: Fri Dec 26, 2003 2:47 am

RE: Oil At 52$/barrel -no Drop In Surcharges...

Tue Jan 16, 2007 2:21 am

BA have just announced a slight reduction in the fuel surcharge

Dan
Where does the time go???
 
Danny
Posts: 3714
Joined: Thu Apr 25, 2002 3:44 am

RE: Oil At 52$/barrel -no Drop In Surcharges...

Tue Jan 16, 2007 2:23 am

Quoting Flyorski (Reply 3):
You'd think that some airline would remove the surcharges to offer a cheaper ticket. Ryanair maybe??

Ryanair never charges fuel surcharge. They have other surcharges such as ripoff credit card fee per person.
 
77411
Posts: 103
Joined: Thu Jul 20, 2006 2:38 am

RE: Oil At 52$/barrel -no Drop In Surcharges...

Tue Jan 16, 2007 2:43 am

Quoting Beaucaire (Thread starter):
Literally all fuel-surcharges have remained at their level-are we being exploited ???

I bet they will come down if the price of oil stays steady at the current rate. But Ill bet you a barrel the price will be back at $60 per, no time flat. Its a traded commodity and they will find some disaster in the world to create a spike in prices. Another side could be the hedges they have in place. They are paying the amount on those hedges and I am sure they are higher then the current rate for a barrel.
 
vv701
Posts: 5773
Joined: Fri Aug 19, 2005 10:54 am

RE: Oil At 52$/barrel -no Drop In Surcharges...

Tue Jan 16, 2007 2:57 am

There were forecasts of $100 per barallel crude. So as Bongodog1964 suggests, some airlines may have hedged future supplies at the top of the market.
 
isitsafenow
Posts: 3413
Joined: Sun Feb 01, 2004 9:22 am

RE: Oil At 52$/barrel -no Drop In Surcharges...

Tue Jan 16, 2007 3:27 am

Quoting Wsan581 (Reply 10):
I thought it was only AA/UA

Delta raised equal to the AA and UA. Northwest raised fares $3 and $5,
depending on the length of the trip. CO or US did not raise fares as of
Friday night Jan 12. WN raised fares in the second half of December, apx $10.
safe
If two people agree on EVERYTHING, then one isn't necessary.
 
georgiaame
Posts: 949
Joined: Sat Aug 13, 2005 7:55 am

RE: Oil At 52$/barrel -no Drop In Surcharges...

Tue Jan 16, 2007 3:50 am

Because they are not fuel surcharges, in spite of what you are told! They are fare increases that the airlines can pass on without having to resort to lowering when the competition refuses to go along. Do the arithmetic on the volume of fuel an aircraft holds, the current price of jetfuel, divide by the number of seats on the aircraft, multiply by $150. and subtract the actual cost of the fuel. See a difference? They have nothing to do with fuel prices. Nothing, Nada. You can paint stripes on a cow, and call it a Zebra, and even invite the local kids to see the zebra. But it is still a cow. In this case, a cash cow.
"Trust, but verify!" An old Russian proverb, quoted often by a modern American hero
 
User avatar
SLCUT2777
Posts: 3407
Joined: Sun Jan 01, 2006 12:17 am

RE: Oil At 52$/barrel -no Drop In Surcharges...

Tue Jan 16, 2007 4:01 am

Quoting Wsan581 (Reply 10):
I thought it was only AA/UA

WN and DL also raised fares, but not by much.
DELTA Air Lines; The Only Way To Fly from Salt Lake City; Let the Western Heritage always be with Delta!
 
boysteve
Posts: 885
Joined: Sun Apr 25, 2004 7:02 am

RE: Oil At 52$/barrel -no Drop In Surcharges...

Tue Jan 16, 2007 7:26 am

Quoting Trekster (Reply 12):
BA have just announced a slight reduction in the fuel surcharge

Yes this is true but part of the explanation maybe that sterling has strengthened against the US dollar.
 
swissy
Posts: 1481
Joined: Fri Jan 07, 2005 11:12 pm

RE: Oil At 52$/barrel -no Drop In Surcharges...

Tue Jan 16, 2007 7:34 am

Quoting GeorgiaAME (Reply 17):
Do the arithmetic on the volume of fuel an aircraft holds, the current price of jetfuel, divide by the number of seats on the aircraft, multiply by $150. and subtract the actual cost of the fuel. See a difference? They have nothing to do with fuel prices. Nothing, Nada. You can paint stripes on a cow, and call it a Zebra, and even invite the local kids to see the zebra. But it is still a cow. In this case, a cash cow.

Exactly my point, airlines (ab)used to a point it is ridicules, but as long it is "legal" and we take it up our a.... nothing will change  thumbsdown , any chance from our governments??? hell no they are milking us too..... did not know you can milk a bull Big grin  crazy   eyepopping  .....

Cheers,

Who is online

Users browsing this forum: ACATROYAL, alex0easy, alski, BobPatterson, cofannyc, CRJ900, David L, flyDTW1992, Google [Bot], Kalevalen, mk2, Razza74, rj777, SCQ83, Someone83, steman, StTim, thekorean, UAEflyer, usflyer123, Yahoo [Bot] and 198 guests