In 2007, only a little more than five years ago, airlines came up with the idea of fuel surcharges. Back then, oil prices spiked over $80 a barrel. In 2008, when oil hit over $100 a barrel, the fuel surcharge was about $100 one-way to Europe.
Now, oil is selling at about $86 a barrel. For examples, a coach fuel surcharge to Europe is over $200; in business class it can be over $400.
Since airlines now have to divulge their total prices (including mandatory surcharges, taxes and fees), some consumers may wonder why this matters. There are several reasons.
First, in fare displays for travel agents and others, the basic price is still shown without taxes or surcharges. So, when looking at fares, it’s easy to get false expectations. For example, the lowest round-trip fare from San Francisco to London on United in February displays like this.
1 UA 201.00R KKXNC13S
But book and price the flights, and the total cost (including mandatory surcharges, taxes and fees) is $876.90
Second, why still single out fuel, especially now that those costs are much more stable? Labor costs, for example, also fluctuate, but there’s no “staff surcharge.”
Third, it’s not honest. If fuel costs had doubled from 2007 that might be a reason to more than double the surcharge. But in truth, they haven’t. Fuel surcharges have gone down from their peak.
Fourth, and perhaps most important to the airlines, it’s a sneaky way to get around corporate discounts and commissions, because surcharges, fees and taxes are nondiscountable.
While officially airlines don’t pay commissions anymore, in reality, especially with higher fares, they contract with major agencies, online and otherwise, and negotiate corporate discounts with large companies, often in return for market share.
In addition, airlines sometimes offer “bulk rates” to tour operators and consolidators, which are discounted from published rates. But again, the fuel surcharge is not discounted.
Besides corporations paying higher total fares, since agencies and tour operators don’t get any commission or discount on the “fuel” portion of the ticket, it means a higher markup is necessary to make a profit. Hence, in the end, the consumer pays more.
If, in the future, the price of oil were to spike significantly, it might make some sense for a temporary surcharge. For now, however, the airlines should admit that this particular surcharge is part of the fare.