onobond

For the years after I widened my OW base also to include BA, I have been utterly surprised (diplomatically speaking) to see the fantasy figures of 'taxes and carrier imposed surcharges' when doing redemption flights with BA, compared to AA. Let me illustrate by two examples:

1, Intended travel: JFK-SFO in F or J.

AA regrets no seats available on any of the direct flights the day I wanted to travel, but can fix AS F JFK-LAX + LAX-SFO (domestic F/2 class) for 25K AA miles + $5.60 in taxes and fees

BA also can't find any seats on direct flights, but offers JFK-PHL in Y, PHL-SFO in domestic F/2class for 46.5K Avios + undisclosed amount of taxes and fees, not available before I bought the ticket. Asked for a rough estimate, the agent quotes "some £280 or more"

2. Intended travel : SFO-HEL in J, direct flight with AY

AA has seats available, for 57.5K AA miles + $11.80 in taxes and fees

BA also has seats available, for 62.5K Avios + (same procedure as above) an estimate of £575 in taxes and fees

The flights are not identical in 1. above, but the discrepancy in taxes and fees are surprisingly high

As per flights in 2. above, they are identical, however. For both AA and BA, AY is a OW partner, who furthermore works together with them both in the TATL JV.
As I had no friends with AY memberships to help me see what taxes and fees woul be in their system, I called the airline. An AY agent over the phone commented that with them, taxes and fees would be marginally higher than what AA would charge.

So what are the BA 'carrier imposed surcharges' for a flight they do not operate, and both AA and, more importantly, AY quotes the fees as much lower than BA. In fact what BA charges is the AY taxes & fees, but multiplied x 68.

In my eye the BA procedure resembles the trend in US hotels, where a 'resort' or destination fee' is added, occasionally higher than the room rate, and is stated to include 2 water bottles, access to pool + gym and a flatscreen TV in the room, all of which has been included in the room rate before, or in some instances at least offered for free to elite members. ISTR that there are legal processes ongoing re these fees, by many considered scam-ish. Perhaps the next step is to scrutinize airline fees?

s0ssos

Oh, it isn't a fuel cost surcharge. It is now a "cost of fuel hedge" surcharge.

corporate-wage-slave

That isn't correct, using BA Avios on AA metal costs the same as AA, and just like BA don't charge surcharges on shorthaul, nor does AA, Avios makes no difference, so it should be $5.60 or somewhere similar, the exact government and airport taxes involved.

For others, you can find the TFC figure fairly easily by doing a dummy revenue booking via say ITA Matrix and looking at the TFC figure there, it's the same for Avios bookings. For USA to Heisinki it would be a high figure.

onobond

Thanks for commenting. So let's leave #1 in my post, as I obviously was misinformed by the agent. But the SFO-HEL trip with AY - everything identical but the fees, that are conspicuously higher with BA than AA. The cost to process a redemption e-ticket for an alliance partner would be the same for both airlines, but obviously aren't. Is there an identifiable reason?

allset2travel

+1.
I found that both E words are properly used.

Dave Noble

AA does not apply carrier surcharges other than for travel on BA or IB, Redeem on any other airline and actual taxes only will be applied - e.g. for a business class award from AMS-SYD (other than on BA) , the taxes will be about EUR62 together with 87,500 miles . With a BA redemption, can see that on BA it is 165500 avios plus a total of £278.24 in taxes and fares disguised as charges

KeaneJohn

Yet they have people phoning up a year to the day of travel near as dam it to secure premium rewards as they are released often in conjunction with upgrade vouchers.

I recall in 2003/4/5 ish there was a class action regarding BA and VS colluding to fix the fuel surcharges as was. They were around £8 short haul and £16 long haul. I got excited as I’d flown to the US with both carriers frequently and ended up with about £40 or so.

BlueStuLondon

So, here’s a question. If they’re not for fuel, what are they for?
What changes so frequently that a global airline couldn’t price the fare to include these “charges”? If they’re not arbitrarily added, how can they suddenly reduce when BA want to do a cheapo fare for a quid plus “lower charges than before for some reason”?

When I take the train, they don’t tell me “The fare is this....oh, plus this and this for ...er... reasons”

Of course I’m talking about the fare itself not the charges that they pay to people like Railtrack which are bundled into the fare and which I don’t need to know about, which I see BA tell me their equivalents with APD and airport charges etc.. What I’m questioning is if the fare is X what does there need to be a surcharge for ...what would it possibly be?

corporate-wage-slave

And as far as I am aware, when you buy a ticket on BA, whether revenue or redemption, on the final screen you will see a simple "this ticket costs £x and y Avios". It's only those wanting to delve down a layer who find out that there are up to 14 levels of taxes and charges, and 1 level of surcharges. The surcharge is applied to all tickets, revenue, redemption, Trade, corporate, I think even staff tickets. So that is fixed for a cabin for a route, but it does sometimes go up or down, purely driven by commercial factors as far as I can tell. My conjecture is that is fairly close to Marginal Cost - if BA don't get that amount of money from the passenger there is no point taking the booking. Marginal Costs can vary and of course can be projected in various ways, depending on how you impute overheads among other factors.

Fortunately at least until recently, aviation is a competitive market, and there are alternative carriers available, some of whom take a different approach.

BlueStuLondon

So why is it not just included in the base fare? If it’s possible to change the additional charge seemingly at will, isn’t it possible to change the base fare? I’m missing something but it’s likely I can’t see the wood for the trees here.

Prospero

That is a good question. I'm not sure anyone here truly has the answer. The practice of splitting fares into net plus carrier imposed surcharges is now so engrained in the industry. All the major carriers that operate between the UK and North America impose surcharges and whether its BA, or Virgin, or Delta, or United, or AA, or Air Canada, the surcharges all match pretty much to the penny. Then when we look at fares from the UK to other markets, we find the surcharges are also aligned across the competition too.

corporate-wage-slave

If they included it into the base fare, how would they do it with Avios bookings? You pay the base fare and the surcharge? Ditto industry fares, Trade fares, IT and BT fares etc.

UKtravelbear

as I posted earlier they could just charge a ‘redemption fee’ or a ‘trade fare supplement’ or whatever they chose to call it depending for special tickets.

they could just have a table of £ x for each cabin in each zone with some exceptions for major routes like JFK.

eefor jfp

CWS, is this conjecture or knowledge based on information gleaned from conversations with BA management? It seems perfectly reasonable. That would also mean that other airlines have decided to absorb the marginal cost as a part of their business model. It also means that BA is choosing to make redemptions profitable independently, not pricing them into the cost of selling the original tickets (or sales to partners) that earned the miles. So when BA sells their miles to Amex or Chase or Tesco, that's 100% pure profit since they will never allow redemptions below the marginal cost of those redeemed tickets. Pretty smart of BA, if their model is successful and people still want to earn and redeem Avios, no matter how much we might whine about it,

corporate-wage-slave

That would be just changing one surcharge name for another surcharge name. There are plenty of people around who think the Carrier Surcharge is a Fuel Surcharge....

(regarding my suggestion that the Surcharge is somehow related to Marginal Cost)
Total conjecture, it's not the sort of thing I would discuss with anyone inside, given it must be commercially sensitive. But the wider point you make is undoubtedly true. Avios and redemptions are very big business for BA, and they are probably market leaders in this field in terms of using their customer base like this. The evidence was in the IAG Market Day slides, which effectively showed how there are multiple advantages to Avios and the Executive Club to leverage business. Avios bookings are not the highest margin business for BA, hence the pseudo rationing, but they fill up those A380s very nicely. Then there are all those lovely people who use Avios in part payment on revenue fares, if you do the maths the benefit to BA from those transactions is amazing.