FlyerTalk Forums - View Single Post - Is DL charging YQ for partner redemptions?
Old Jun 22, 11, 8:09 am
  #28  
ExAAerOnDL
 
Join Date: Dec 2010
Location: ATL
Programs: DL (Diamond), HHonors (Silver)
Posts: 158
At the risk of setting off a bunch of anti-airline flames, let me answer some of the questions I have read here:

What is "YQ"?: YQ is a box on the ticket that was originally intended to be one of the tax collection boxes. However, it is now used primarily for surcharges. The other means of collecting a surcharge is Q. Unlike YQ, Q surcharges are lumped in with the base fare. The primary difference between YQ and Q is that agencies don't get paid commission on YQ, whereas they do on Q. That is why you have seen many airlines shift.

Who is obligated to collect YQ?: YQ creates nightmares for revenue accounting. Q is easy to administer - you place it in your fare rules, it prices into the fare, and then the overall revenue is prorated among carriers. YQ was designed to be a tax-box, thus it does not get prorated. That means the ticketing carrier keeps all of the YQ revenue. Thus if you book DL-DL*/AF-DL*/AF on 006 stock, DL keeps all of the fuel surcharge (even though it only flew the first segment). The only way to do a proration is to manually set something up, or at least that was the case as recently as a couple years ago. I don't recall all of the details, but whether one carrier collects YQ on behalf of another depends on how fares are filed in ATPCO - if the filing carrier allows collection, and the ticketing carrier opts to collect, the YQ is collected. However, this was an all-or-nothing deal. A carrier had to turn the switch on or off in ATPCO - I don't believe one could pick and choose by partner or by fare.

Why do airlines collect fuel surcharges?: This is a favorite. For all the complaints about consumer deception, the fact is that all fuel surcharges are contained in any advertised fare in the U.S. - splitting anything out other than government or airport imposed fees/taxes is prohibited by DOT regulation and will get a carrier fined quickly. So there is no consumer deception - whether the surcharge is filed as a Q or a YQ makes no difference to the customer (unless, of course, you're playing around in ExpertFlyer, looking at filed fares, and don't have the expertise or software to easily calculate the all in fare). Now why do airlines do it? Simple. There are literally millions of fares filed in ATPCO. Assume an airline files fares for 40,000 different O&D city-pairs, and has 15 fares filed for each one. That's 600,000 filed fares. The effort required to increase each of those $10 is astronomical. It is far easier to change the Q/YQ surcharge in order to make global fare changes. Moreover, they split out what is a highly variable cost (fuel) and allow for variable revenue. To the poster who scoffed that a "labor" surcharge could be imposed, the fact is that labor costs are relatively constant. Fuel spikes and falls constantly. And if you look at the amount of fuel surcharges collected, and the increased fuel costs over the past decade, you'll see that they are not a cash-positive affair. Rather, they attempt to partially offset the increased cost of fuel, but fall short.

Of course, one of the big problems you find is that travel agencies quickly discovered ways to cheat the system (that being their favorite pastime). So one problem with YQ was that if one carrier used Q surcharges, you could ticket travel on that carrier's paper for travel on a YQ carrier, and the YQ wouldn't be collected. So you saw all sorts of massive shifts, where an itinerary would be ticketed entirely on another carrier's paper. This scam quickly flowed to the internet, leading many carriers to stop offering OA travel for sale until a technological fix could be put in place. And yes, it was a scam. You are not supposed to book an itinerary on a carrier's stock unless it is marketing or operating at least one of the segments.

So in short: (1) YQ is simply a means carriers use to charge a non-commissionable fuel surcharge; however, technological limitations make this a highly imperfect way of doing so; (2) consumers are not defrauded in the least, because a Q or a YQ surcharge must be included in all fare displays intended for consumer consumption; and (3) fuel surcharges are used to help vary fare levels with the price of fuel without forcing analysts to change millions of fares each time they do.

Nothing illicit, nothing immoral. Just an industry that has never earned a fair return on capital trying to keep its head above water.
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