LH increases[/reduces] fuel surcharge

Old Dec 10, 08, 10:20 am
  #136  
 
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LH lowers fuel surcharge on 16.12

within europe down EUR 3 to EUR 21 (cross border flights)

longhaul down EUR 10 to EUR 82


this applies to tickets issued from 16.12
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Old Dec 10, 08, 12:03 pm
  #137  
 
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Nice. A move in the right direction. Hope to see more of these and eventually get rid of them for good.
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Old Dec 10, 08, 12:20 pm
  #138  
 
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20-30 EUR would me more appropriate (longhaul)…
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Old Dec 10, 08, 12:40 pm
  #139  
 
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0 would be most appropriate. They started introducing these when the oil price was around the same level as it is now.
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Old Dec 10, 08, 12:48 pm
  #140  
 
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Originally Posted by Pacha View Post

this applies to tickets issued from 16.12
I would assume, that tickets issued before that date but for travel after that date, do not get money back.
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Old Dec 10, 08, 3:18 pm
  #141  
 
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Originally Posted by aquaguy View Post
I would assume, that tickets issued before that date but for travel after that date, do not get money back.
Same like tickets booked before a date the fuel surcharge was increased... No claiming of the higher surcharge by LH (except in case of rebooking and recalculation of the ticket).


Best regards,

taigatrommel
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Old Dec 11, 08, 12:49 am
  #142  
 
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So, Maybe LH is planning to take over BMI and Austrian with the help of additional fuel surcharges levied on flying folks.
On a side note,
effective 1.1.2009, Asiana is to lower fuel surcharge on all one-way long-haul from $ 141 to $41.
So I will have to pay EUR 100 more fuel surcharge for ICN-FRA-ICN on LH than OZ. What a nice X-mas present!
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Old Dec 11, 08, 2:06 am
  #143  
 
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I was under the impression that First Class is the one and only National Disgrace but Lufthansa is just greedy on surcharges. Prices are indeed down to levels where LH has introduced surcharges a couple of years ago and now I am paying most of my fuel just with the surcharge - oil has to go down to zero now in order to allow LH to waive the surcharge....

Can't believe that LH is advertising their TUV cerfificate of Pricing Transparency

Good news: There are more airlines out there. My revenue flights with LH in 2008 match my status miles accrued this year: 0.
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Old Dec 11, 08, 11:21 am
  #144  
 
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I'm no expert - but maybe LH hedged large parts of it's current fuel need at a higher price earlier this year?

Any news re. LX lowering the surcharges as well?
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Old Dec 11, 08, 12:01 pm
  #145  
 
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What about Miles Tickets?

Will fuel surcharges on these go down again...

On LX you can see that fuel taxes on miles tickets are much higher than on "normal" paid tickets. Last reduction was only on paid tickets.

Some might consider this cheating
(whatever the legal situation is... it is surely not good busines practise...)
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Old Dec 11, 08, 12:43 pm
  #146  
 
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I'm glad I can give some insight on this topic. Lufthansa has a standard hedging procedure. The fuel price of a specific flight actually consists of 24 different prices:

24-6 months in advance: 5% of required fuel for a flight is hedged per month (via the "oil market")

6 months up to the flight: remaining fuel is hedged (via the "jet fuel market")

This also explains why the fuel surcharge won't be eliminated for the time being.


"Lufthansa uses standard market instruments such as forward contracts and options for its fuel price hedges. We hedge 5 per cent of planned consumption per month in Brent collars, up to a hedging level of 90 per cent and with a lead time of 24 months. The hedging transactions are, therefore, based on fixed rules and map the average of crude oil prices over time. The six months following a given date are therefore hedged to 90 per cent."

http://www.lufthansa-financials.de/s..._l2/index.html
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Old Dec 11, 08, 4:34 pm
  #147  
 
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Originally Posted by athomas76 View Post
I'm no expert - but maybe LH hedged large parts of it's current fuel need at a higher price earlier this year?

Any news re. LX lowering the surcharges as well?
Originally Posted by regoc View Post
I'm glad I can give some insight on this topic. Lufthansa has a standard hedging procedure. The fuel price of a specific flight actually consists of 24 different prices:

24-6 months in advance: 5% of required fuel for a flight is hedged per month (via the "oil market")

6 months up to the flight: remaining fuel is hedged (via the "jet fuel market")

This also explains why the fuel surcharge won't be eliminated for the time being.


"Lufthansa uses standard market instruments such as forward contracts and options for its fuel price hedges. We hedge 5 per cent of planned consumption per month in Brent collars, up to a hedging level of 90 per cent and with a lead time of 24 months. The hedging transactions are, therefore, based on fixed rules and map the average of crude oil prices over time. The six months following a given date are therefore hedged to 90 per cent."

http://www.lufthansa-financials.de/s..._l2/index.html
We had those hedging threads already.... use the search function.

That LH doesn't set the surcharge to 0 is just another source of earnings for them ... same for gasoline stations ... or our banks, didn't see anything happen wrt credit rates though ECB slammed its rates down.
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Old Dec 11, 08, 4:48 pm
  #148  
 
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So what is the benefit of the hedging for LH then? They are taking out peaks and troughs, ok. But I always thought they use hedging "intelligently" to actually lower their total fuel costs (i.e., hedge when prices are rising, but stop that before prices reach the peak).
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Old Dec 11, 08, 8:54 pm
  #149  
 
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Originally Posted by CalFlyer View Post
So what is the benefit of the hedging for LH then? They are taking out peaks and troughs, ok. But I always thought they use hedging "intelligently" to actually lower their total fuel costs (i.e., hedge when prices are rising, but stop that before prices reach the peak).
In the long run, hedging cannot do more than taking out the peaks. You pay the fuel plus the hedging cost - and unless you have a crystal ball about the future, you can never make money out of this.

If the prices are rising, LH is paying less - if they are falling, LH is paying more (and at the moment fuel is more expensive for LH due to their hedging).

The thing is that LH is still charging customers in high price times as if they were no hedging and they are charging in low price times because they do hedging (meaning paying more than necessary)... LH has made heaps of money out of it for the shareholders - but guess who is paying the bill...
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Old Dec 12, 08, 1:55 am
  #150  
 
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Originally Posted by Triple3 View Post
That LH doesn't set the surcharge to 0 is just another source of earnings for them ... same for gasoline stations ... or our banks, didn't see anything happen wrt credit rates though ECB slammed its rates down.

It is very clear what is happening. When the fuel price rise began, every airline introduced the surcharges because they wanted to be on the safe side. At that time, they still were paying the lower prices.

Now, after the price came down again, a lot of airlines have hedged their fuel at high prices. But the market price is around $40 and $50. Having that in mind, it is also important to look at the futures! The one year oil futures are at about $75. So airlines have to, again, calculate their surcharges at roughly double the amount of the current market price.

Of course the current situation leads to a funny conclusion. Airlines could buy oil for $40 now, and sell it right away for $75 as futures. Both capital cost and storage would be marginal compared to the profit. But there is NO available storage! (neither on land nor on ships)

Clearly airlines are not stupid and (as every industry) they try to keep the higher surcharges (=revenues) in place. Still we shouldn’t forget that the oil price isn’t back at $40 for good.
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