Oil price at 4 year low but still V high fuel surcharges
Dec 7, 2014, 3:04 am
#151
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Dec 7, 2014, 3:06 am
#152
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There's a danger in sailing past the point Hillrider is making.
BA introduced a surcharge to cover its exposure to the volatility of fuel prices. This became known as the fuel tax, represented as YQ in ticketing-lingo.
BA said "trust us on this".
They then re-named the YQ surcharge, claim it now has no direct link to fuel costs but maintain its upward trajectory.
And, yes, we understand that YQ in whatever form is simply a contributor to revenue. But the question asked is if the airline's behaviour is best categorised by honesty and candour.
Clearly there are reasons for the uneasy duplicity displayed by BA, not least some concern about the propriety of a pseudo-tax on fuel.
BA introduced a surcharge to cover its exposure to the volatility of fuel prices. This became known as the fuel tax, represented as YQ in ticketing-lingo.
BA said "trust us on this".
They then re-named the YQ surcharge, claim it now has no direct link to fuel costs but maintain its upward trajectory.
And, yes, we understand that YQ in whatever form is simply a contributor to revenue. But the question asked is if the airline's behaviour is best categorised by honesty and candour.
Clearly there are reasons for the uneasy duplicity displayed by BA, not least some concern about the propriety of a pseudo-tax on fuel.
Dec 7, 2014, 3:10 am
#153
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I think you are both sailing past the point our OP is making.
BA introduced a surcharge to cover its exposure to the volatility of fuel prices. This became known as the fuel tax, represented as YQ in ticketing-lingo.
BA said "trust us on this".
They then re-named the YQ surcharge, claim it now has no direct link to fuel costs but maintain its upward trajectory.
And, yes, we understand that YQ in whatever form is simply a contributor to revenue. But the question asked is if the airline's behaviour is best categorised by honesty and candour.
Clearly there are reasons for the uneasy duplicity displayed by BA, not least some concern about the propriety of a pseudo-tax on fuel.
BA introduced a surcharge to cover its exposure to the volatility of fuel prices. This became known as the fuel tax, represented as YQ in ticketing-lingo.
BA said "trust us on this".
They then re-named the YQ surcharge, claim it now has no direct link to fuel costs but maintain its upward trajectory.
And, yes, we understand that YQ in whatever form is simply a contributor to revenue. But the question asked is if the airline's behaviour is best categorised by honesty and candour.
Clearly there are reasons for the uneasy duplicity displayed by BA, not least some concern about the propriety of a pseudo-tax on fuel.
Dec 7, 2014, 3:16 am
#154
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One thing also to remember is that big companies will tacitly collude on price.
They use game theory (like the prisoner dilemma) to work out what their rivals will do given a set of circumstances.
There is a clear benefit to all airlines if prices are kept higher for as long as possible so it would not surprise me if each airline independently came to the conclusion to keep prices where they were in the short term.
It's only illegal if the actively collude, and I am sure they have learnt that lesson.
They use game theory (like the prisoner dilemma) to work out what their rivals will do given a set of circumstances.
There is a clear benefit to all airlines if prices are kept higher for as long as possible so it would not surprise me if each airline independently came to the conclusion to keep prices where they were in the short term.
It's only illegal if the actively collude, and I am sure they have learnt that lesson.
Dec 7, 2014, 4:09 am
#156
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Obviously nobody knows how long fuel will stay at this price, but there one thing we all do know ....... there is very little stopping BA buying lots of it at the current price in order to being down the fuel surcharge in the future as per their promise which the OP has pointed out.
Should we hold our breath?
Should we hold our breath?
Dec 7, 2014, 4:26 am
#158
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Or take a long position on a futures market and pay the interest? Saves on storage.
Dec 7, 2014, 5:16 am
#159
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It can last for as long as the Saudis/GCC want to undermine: the finances of ISIL/ISIL, Iran, and Russia; and the energy independence and energy-development prospects of shale-oil-holding areas which otherwise compete for the "sheikhs'" petrodollar streams.
Dec 7, 2014, 9:12 am
#161
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If anyone ever "trusts" a private company in a capitalist environment to voluntarily sell their product for less than they need to, they need to get their head examined...
For the millionth time, it is NOT a fuel surcharge and is NOT directly related to fuel prices. What it may have been before is irrelevant.
Obviously it isn't or they wouldn't keep selling at that price... It's below the cost price of SOME companies - US shale in particular - but is still perfectly profitable for others.
For the millionth time, it is NOT a fuel surcharge and is NOT directly related to fuel prices. What it may have been before is irrelevant.
Obviously it isn't or they wouldn't keep selling at that price... It's below the cost price of SOME companies - US shale in particular - but is still perfectly profitable for others.
Dec 7, 2014, 9:37 am
#162
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I do believe the Saudis are just about breaking even at the current price, and they don't want to lose market share so they're keeping production the same. However, most oil-producing nations have higher costs than the Saudis and are suffering, but of course if they reduce their output to boost supply they'll suffer from reduced income and only those who don't cut output will gain from the increased price. It's a tough one and makes me glad I'm not an economist.
Dec 7, 2014, 10:47 am
#163
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I do believe the Saudis are just about breaking even at the current price, and they don't want to lose market share so they're keeping production the same. However, most oil-producing nations have higher costs than the Saudis and are suffering, but of course if they reduce their output to boost supply they'll suffer from reduced income and only those who don't cut output will gain from the increased price. It's a tough one and makes me glad I'm not an economist.
I'm certainly not an economist either, but my understanding was further drops would hit Saudi Arabia but it could maintain the status quo at this price level.
Dec 7, 2014, 11:04 am
#164
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If so then my mistake! I was under the impression that Saudi production costs were well below the current price and "break-even" referred to the government finances. I.e. oil is still highly profitable, but if their income from it drops then they'll need to look at government spending.
I'm certainly not an economist either, but my understanding was further drops would hit Saudi Arabia but it could maintain the status quo at this price level.
I'm certainly not an economist either, but my understanding was further drops would hit Saudi Arabia but it could maintain the status quo at this price level.
Dec 7, 2014, 11:12 am
#165
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Hopefully someone will correct me if I'm not - it's not exactly a great passion of mine either!