Time for AA to drop Fuel Surcharges
#1
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Join Date: Jun 2007
Location: New York Metropolitan Area 45 km from JFK
Programs: UA,AA,AS,BA
Posts: 4,607
Time for AA to drop Fuel Surcharges
I am in the process of planning a trip for 5 people to Brazil. JJ (TAM) and UA have dropped their QY fuel surcharges to $ 60-$ 65 , but American Airlines is still at $ 250. For 5 people that is almost $ 1000 of unnessesary expense. If TAM and United have been able to drop Surcharges, then American Airlines must also be able to do so. Current JET A1 fuel prices are down 30% - 45 % from when these surcharges were imposed and I am sure AA buys its fuel at least as cost-efficiently as JJ or UA , if not better. Wake up AA, with new expanded service to Brazil, now is not the time to play Mickey Mouse with fees and charges making AA tickets $ 200 more expensive . Hope some AA exec reads FlyerTalk
#2
FlyerTalk Evangelist
Join Date: May 2001
Location: LAX; AA EXP, MM; HH Gold
Posts: 31,789
I disagree. It's time for AA to make some money. For the first nine months of 2008, AA has lost over a half billion dollars (excluding special items) and has produced negative cash from operations. I want AA to survive - actually thrive - so that my status and accumulated miles are worth something. With premium revenue tanking, now's not the time to drop any fees, IMO. YMMV.
#3
Join Date: May 2003
Location: Plano, TX USA
Programs: AA LT Plat, HH Diamond, Marriott Plat
Posts: 171
AA's fuel hedging has it likely paying more than the current daily spot price - such is the risk of doing this. It will take them weeks/months to get out from under these to where they are paying sufficiently lower rates again. Only then would it make sense for them to drop the surcharges.
But of course - the "surcharge" is only compensating for the cost of fuel - therefore should not allow them additional margin - yea right...
Either way, don't hate the player - hate the game....
Michael
But of course - the "surcharge" is only compensating for the cost of fuel - therefore should not allow them additional margin - yea right...
Either way, don't hate the player - hate the game....
Michael
#4
Join Date: Jul 2008
Location: DCA
Programs: AA EXP 1MM, WOH Globalist
Posts: 1,160
I disagree. It's time for AA to make some money. For the first nine months of 2008, AA has lost over a half billion dollars (excluding special items) and has produced negative cash from operations. I want AA to survive - actually thrive - so that my status and accumulated miles are worth something. With premium revenue tanking, now's not the time to drop any fees, IMO. YMMV.
#5
FlyerTalk Evangelist
Join Date: Sep 2003
Location: MileagePlus Premier Gold
Posts: 11,522
This article gives good reasons why prices are always "sticky downward" regardless of the change in material/fuel costs.
#6
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Join Date: May 2001
Location: LAX; AA EXP, MM; HH Gold
Posts: 31,789
$70/bbl to $80/bbl oil prices may still be higher than the level that allows AA to be profitable under its current model. It's even worse when you consider than oil's fall from $147 to its current price of about half that has been accompanied (maybe even caused by) an impending worldwide slowdown in economic activity. AA's facing a very bleak winter, as are all six (soon to be five) US legacy airlines.
What I find curious is that oil recently fell from historic highs to merely expensive levels (when compared to prices for the last couple of decades) - airline losses are rolling in - and posters are demanding that fuel surcharges be dropped or reduced immediately. Doesn't matter that oil could rise again in the next few months or that airline revenue is heading into the toilet - they want immediate gratification NOW!
If oil had fallen to $30/bbl a year or two ago and airlines were awash in billions of dollars of profits, then I could understand the urgent demands for surcharge reduction. But it's only been a few weeks, people.
What I find curious is that oil recently fell from historic highs to merely expensive levels (when compared to prices for the last couple of decades) - airline losses are rolling in - and posters are demanding that fuel surcharges be dropped or reduced immediately. Doesn't matter that oil could rise again in the next few months or that airline revenue is heading into the toilet - they want immediate gratification NOW!
If oil had fallen to $30/bbl a year or two ago and airlines were awash in billions of dollars of profits, then I could understand the urgent demands for surcharge reduction. But it's only been a few weeks, people.
#7
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Join Date: Sep 2006
Programs: AAdvantage PP
Posts: 13,913
$70/bbl to $80/bbl oil prices may still be higher than the level that allows AA to be profitable under its current model. It's even worse when you consider than oil's fall from $147 to its current price of about half that has been accompanied (maybe even caused by) an impending worldwide slowdown in economic activity. AA's facing a very bleak winter, as are all six (soon to be five) US legacy airlines.
What I find curious is that oil recently fell from historic highs to merely expensive levels (when compared to prices for the last couple of decades) - airline losses are rolling in - and posters are demanding that fuel surcharges be dropped or reduced immediately. Doesn't matter that oil could rise again in the next few months or that airline revenue is heading into the toilet - they want immediate gratification NOW!
If oil had fallen to $30/bbl a year or two ago and airlines were awash in billions of dollars of profits, then I could understand the urgent demands for surcharge reduction. But it's only been a few weeks, people.
What I find curious is that oil recently fell from historic highs to merely expensive levels (when compared to prices for the last couple of decades) - airline losses are rolling in - and posters are demanding that fuel surcharges be dropped or reduced immediately. Doesn't matter that oil could rise again in the next few months or that airline revenue is heading into the toilet - they want immediate gratification NOW!
If oil had fallen to $30/bbl a year or two ago and airlines were awash in billions of dollars of profits, then I could understand the urgent demands for surcharge reduction. But it's only been a few weeks, people.
#8
Join Date: Oct 2002
Posts: 1,700
BS.
AA decided to link and justify these fuel surcharges based to th escalating price of oil. Thus, they should be reduced as oil drops.
Now, had they decided to just raise their fares. Fair. They don't have to reduce their fares. But AA went the fuel surcharge route, so they should be reduced as fuel declines.
I think that competition will bring these idiots in line.
AA decided to link and justify these fuel surcharges based to th escalating price of oil. Thus, they should be reduced as oil drops.
Now, had they decided to just raise their fares. Fair. They don't have to reduce their fares. But AA went the fuel surcharge route, so they should be reduced as fuel declines.
I think that competition will bring these idiots in line.
#9
In Memoriam, FlyerTalk Evangelist
Join Date: Jun 2000
Location: Benicia CA
Programs: Alaska MVP Gold 75K, AA 3.8MM, UA 1.1MM, enjoying the retired life
Posts: 31,849
Would you factor fuel hedging in there somewhere? Seem to recall that UA lost $500 million 3rd quarter when they were hedged at $110 a barrel. I don't know what hedging AA has in place, but I bet it's not for $74 a barrel oil.
#10
Join Date: Dec 2006
Location: Washington DC Metro Area
Programs: A: PP, LTG/1.5M | UA: SLV | Bonvoy LTTi | IHG PLT| Avis PC | Nat'l Emerald Club EE
Posts: 1,067
Here's an interesting link on aa.com: https://www.aa.com/content/amrcorp/c...urements.jhtml
According to their example, they operated at a loss of 0.6 cents/mile last year. Perhaps that was mitigated by other income, but I don't know.
In any case, that was last year...this year has definitely been worse for AA and others. As has already been stated, airlines provide a service and even for what they're charging now it's relatively cheap. I know for certain I can't drive the places I want to go--on the schedule I want to do it in--for as little as it costs me to fly. And I'd be surprised if that weren't the case for most of us.
I am quite invested in AA; I am also quite willing to pay reasonable prices to keep them in business--so far, they haven't disappointed. YMMV, etc., etc.
cheers!
According to their example, they operated at a loss of 0.6 cents/mile last year. Perhaps that was mitigated by other income, but I don't know.
In any case, that was last year...this year has definitely been worse for AA and others. As has already been stated, airlines provide a service and even for what they're charging now it's relatively cheap. I know for certain I can't drive the places I want to go--on the schedule I want to do it in--for as little as it costs me to fly. And I'd be surprised if that weren't the case for most of us.
I am quite invested in AA; I am also quite willing to pay reasonable prices to keep them in business--so far, they haven't disappointed. YMMV, etc., etc.
cheers!
Last edited by AAir_head; Oct 20, 2008 at 3:42 pm
#11
A FlyerTalk Posting Legend
Join Date: Jan 2002
Posts: 44,574
I disagree. It's time for AA to make some money. For the first nine months of 2008, AA has lost over a half billion dollars (excluding special items) and has produced negative cash from operations. I want AA to survive - actually thrive - so that my status and accumulated miles are worth something. With premium revenue tanking, now's not the time to drop any fees, IMO. YMMV.
Dave
#12
Join Date: Mar 2003
Location: NYC/PSP
Programs: AA EXP, A3 Gold
Posts: 4,106
I completely agree. AA painted themselves into a corner. They should have just increased fares to avoid the backlash when the price of fuel drops but their fuel surcharges don't.
#14
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Cheers.
#15
FlyerTalk Evangelist
Join Date: Mar 1999
Posts: 12,097
Well said--it's called integrity and honesty and that's something that especially those with "vested interest" should be screaming for.