Airlines not dropping fuel surcharge!
Nov 27, 2001 | 1:58 pm
#1
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Airlines not dropping fuel surcharge!
You knew they wouldn't rush to drop this charge quite as fast as they rushed to add it didn't you.
<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Airlines to Maintain Fuel Surcharge
Airlines Reluctant to Eliminate Fuel Surcharges, Despite Slump in Energy Prices
By BRAD FOSS
AP Business Writer
NEW YORK (AP) -- Most major airlines plan to maintain a fuel surcharge of $20 on each one-way ticket even though the price of jet fuel has been cut in half during the past year.
The industry's reluctance to drop the charge contrasts with the nation's major hotel companies, which have eliminated the additional fees they put in place to combat skyrocketing energy prices.
``Regardless of what fuel prices do, our costs continue to rise and, especially in today's market, we need every nickel we can get because we are still losing about $10 million a day,'' said John Hotard, a spokesman for American Airlines, the nation's largest carrier, said Tuesday.
Industrywide losses are likely to be $10 billion for the year, analysts predict, due to drastically lower demand attributable to the recession and the Sept. 11 attacks.
While airlines have cut fares to try and spur demand, they have stubbornly held on to the fuel surcharges, which now make up roughly 15 percent of the average domestic ticket price.
By comparison, major hotel chains that tacked on energy surcharges earlier this year, ranging from $1.50 to $5 per night, have gradually eliminated them.
Marriott International Inc. and Hilton Hotels Corp. [NYSE:HLN - news] dropped all surcharges by the end of the summer, while Starwood Hotels and Resorts Worldwide Inc. eliminated the fee on Nov. 15.
``It was a temporary measure to recoup costs,'' said Tom Marder, a Marriott spokesman.
Most of the nation's largest carriers introduced a surcharge of $10 each way in February 2000 and then doubled the amount nine months later -- when crude oil was more than $30 a barrel. Oil prices are now below $19 a barrel on the New York Mercantile Exchange.
A gallon of jet fuel costs roughly 52 cents today, compared with $1.06 a year ago, although the price has fluctuated significantly throughout that period, said John Kilduff, a commodities analyst at Fimat USA Inc. in New York. The price of jet fuel headed sharply lower after Sept. 11 as carriers reduced flight schedules by nearly 20 percent.
However, a research note written Tuesday by ABN Amro airline analyst Ray Neidl suggests the carriers might be wise to maintain the fuel surcharge.
``Analysts who follow the oil industry seem to believe that prices will not significantly decline further,'' Neidl said, adding that the recent rally in airline stocks, which was brought about by low fuel prices, is probably over.
Each year, airlines use roughly 20 billion gallons of jet fuel and it accounts for roughly one-tenth of all expenditures, according to the Air Transport Association, an industry group based in Washington.
Industry watchers said airlines have a history of adding fuel surcharges whenever energy prices go up. However, when prices come down, the surcharge is typically subtracted in name only. An equal amount, analysts and industry officials said, is typically shifted to the base price of a ticket.
As Minneapolis-based airfare analyst Terry Trippler put it: ``Fuel surcharges are eliminated but reincorporated.''
The only major carrier without a fuel surcharge is Dallas-based Southwest Airlines, and rival carriers said they do not include the surcharge in markets where they compete with Southwest.
``Suddenly the gas doesn't cost as much where Southwest flies,'' Trippler said. ``How dumb do they think we are?''
For its part, Delta Air Lines' has maintained a fuel surcharge of just $10 on each one-way ticket, the Atlanta-based company said.
Northwest Airlines of Eagan, Minn., said it has no plans to eliminate the surcharge because it hasn't yet been fully compensated for extra money spent on jet fuel before prices plummeted.
The fuel surcharge is not necessarily apparent to travelers because it does not appear on airfare receipts, as do sales, airport and city surcharges.
While the fuel surcharges are often waived on tickets discounted through special promotions, Trippler said consumers should be aware that not all advertised fares include them.
``Read the fine print,'' he said. </font>
Airlines Reluctant to Eliminate Fuel Surcharges, Despite Slump in Energy Prices
By BRAD FOSS
AP Business Writer
NEW YORK (AP) -- Most major airlines plan to maintain a fuel surcharge of $20 on each one-way ticket even though the price of jet fuel has been cut in half during the past year.
The industry's reluctance to drop the charge contrasts with the nation's major hotel companies, which have eliminated the additional fees they put in place to combat skyrocketing energy prices.
``Regardless of what fuel prices do, our costs continue to rise and, especially in today's market, we need every nickel we can get because we are still losing about $10 million a day,'' said John Hotard, a spokesman for American Airlines, the nation's largest carrier, said Tuesday.
Industrywide losses are likely to be $10 billion for the year, analysts predict, due to drastically lower demand attributable to the recession and the Sept. 11 attacks.
While airlines have cut fares to try and spur demand, they have stubbornly held on to the fuel surcharges, which now make up roughly 15 percent of the average domestic ticket price.
By comparison, major hotel chains that tacked on energy surcharges earlier this year, ranging from $1.50 to $5 per night, have gradually eliminated them.
Marriott International Inc. and Hilton Hotels Corp. [NYSE:HLN - news] dropped all surcharges by the end of the summer, while Starwood Hotels and Resorts Worldwide Inc. eliminated the fee on Nov. 15.
``It was a temporary measure to recoup costs,'' said Tom Marder, a Marriott spokesman.
Most of the nation's largest carriers introduced a surcharge of $10 each way in February 2000 and then doubled the amount nine months later -- when crude oil was more than $30 a barrel. Oil prices are now below $19 a barrel on the New York Mercantile Exchange.
A gallon of jet fuel costs roughly 52 cents today, compared with $1.06 a year ago, although the price has fluctuated significantly throughout that period, said John Kilduff, a commodities analyst at Fimat USA Inc. in New York. The price of jet fuel headed sharply lower after Sept. 11 as carriers reduced flight schedules by nearly 20 percent.
However, a research note written Tuesday by ABN Amro airline analyst Ray Neidl suggests the carriers might be wise to maintain the fuel surcharge.
``Analysts who follow the oil industry seem to believe that prices will not significantly decline further,'' Neidl said, adding that the recent rally in airline stocks, which was brought about by low fuel prices, is probably over.
Each year, airlines use roughly 20 billion gallons of jet fuel and it accounts for roughly one-tenth of all expenditures, according to the Air Transport Association, an industry group based in Washington.
Industry watchers said airlines have a history of adding fuel surcharges whenever energy prices go up. However, when prices come down, the surcharge is typically subtracted in name only. An equal amount, analysts and industry officials said, is typically shifted to the base price of a ticket.
As Minneapolis-based airfare analyst Terry Trippler put it: ``Fuel surcharges are eliminated but reincorporated.''
The only major carrier without a fuel surcharge is Dallas-based Southwest Airlines, and rival carriers said they do not include the surcharge in markets where they compete with Southwest.
``Suddenly the gas doesn't cost as much where Southwest flies,'' Trippler said. ``How dumb do they think we are?''
For its part, Delta Air Lines' has maintained a fuel surcharge of just $10 on each one-way ticket, the Atlanta-based company said.
Northwest Airlines of Eagan, Minn., said it has no plans to eliminate the surcharge because it hasn't yet been fully compensated for extra money spent on jet fuel before prices plummeted.
The fuel surcharge is not necessarily apparent to travelers because it does not appear on airfare receipts, as do sales, airport and city surcharges.
While the fuel surcharges are often waived on tickets discounted through special promotions, Trippler said consumers should be aware that not all advertised fares include them.
``Read the fine print,'' he said. </font>
Nov 27, 2001 | 2:20 pm
#2
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WOW, I did not even realize we were still paying it.
Why did hotels disclose the charge and airlines don't?
In other words, if consumers knew they were being ripped off, we'd *****. All we see is the entire tax amount on our ticket.
Suggestions on making this public knowledge?
Why did hotels disclose the charge and airlines don't?
In other words, if consumers knew they were being ripped off, we'd *****. All we see is the entire tax amount on our ticket.
Suggestions on making this public knowledge?
Nov 27, 2001 | 2:30 pm
#3
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Who really cares? All I ever look at is total price for airline tickets and I could care less how the airlines break it down. If they didn't charge this fee, they'd just raise their fares anyway.
It's not like the hotels that wouldn't disclose the energy surcharge in your rate and would only tack it on at the end basically.
This fee is "hidden" in plain sight.
It's not like the hotels that wouldn't disclose the energy surcharge in your rate and would only tack it on at the end basically.
This fee is "hidden" in plain sight.
Nov 27, 2001 | 3:16 pm
#4
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<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Beckles:
[B]Who really cares? All I ever look at is total price for airline tickets and I could care less how the airlines break it down. If they didn't charge this fee, they'd just raise their fares anyway.
[B]</font>
[B]Who really cares? All I ever look at is total price for airline tickets and I could care less how the airlines break it down. If they didn't charge this fee, they'd just raise their fares anyway.
[B]</font>
.
Nov 27, 2001 | 4:13 pm
#5
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Because the fuel surcharge is included in the pre-tax fare, I don't care whether airlines keep it. They can label, subdivide and re-un-allocate all they want. I simply look at the total price, either before or after tax.
Nov 27, 2001 | 4:40 pm
#6
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As usual, you guys are right! However, the 'who cares' bit gets old - the original poster was simply pointing out that there is no ryhme nor reason to rationales for charges. As another example, that 3% federal tax that is ACTUALLY APPLIED TO OTHER TAXES on your phone bill dates from an 1898 tax passed during the Spanish American War, and is only now being phased out over 100 years later. I wonder if there's another reason the airlines are leaving the extra cost as a fuel surcharge - perhaps to avoid unpleasantness from customers when they hike something else to make up the difference.
A quick check of my my last in-home phone bill (I have long distance through a different carrier) shows taxes of 52.6% due to all of the unvoted taxes and surcharges slammed onto the phone bill. But 'who cares' if you just price the total bill at the end of the month to compare to some other projected bill with a different carrier?? Is anyone else sick to death of getting taxed and surcharged to death on money on which we have already paid steep taxes by entities which are apparently accountable to no one and upon which charges no one can vote?
Say I take $100 of income which has been taxed federally and at state level at a rate around 41%. That leaves $59 to pay my phone bill of $31.29, of which $20.50 is for phone services and the rest for taxes. Now I have left $27.71 - if I dare spend all of it locally ($25.89 on actual item), I get whacked with another 7% sales tax. Total purchasing power of that $100 in income: $25.89 + $20.50 = $46.39. My effective tax rate on that $100 is 53.61%.
I think I understand why the original poster was aggravated by this BS fuel surcharge, because the airlines can't muster the courage to call it what it actually is - a revenue enhancer.
A quick check of my my last in-home phone bill (I have long distance through a different carrier) shows taxes of 52.6% due to all of the unvoted taxes and surcharges slammed onto the phone bill. But 'who cares' if you just price the total bill at the end of the month to compare to some other projected bill with a different carrier?? Is anyone else sick to death of getting taxed and surcharged to death on money on which we have already paid steep taxes by entities which are apparently accountable to no one and upon which charges no one can vote?
Say I take $100 of income which has been taxed federally and at state level at a rate around 41%. That leaves $59 to pay my phone bill of $31.29, of which $20.50 is for phone services and the rest for taxes. Now I have left $27.71 - if I dare spend all of it locally ($25.89 on actual item), I get whacked with another 7% sales tax. Total purchasing power of that $100 in income: $25.89 + $20.50 = $46.39. My effective tax rate on that $100 is 53.61%.
I think I understand why the original poster was aggravated by this BS fuel surcharge, because the airlines can't muster the courage to call it what it actually is - a revenue enhancer.
Nov 27, 2001 | 5:26 pm
#7
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Air Canada reduced their fuel surcharge last week, from C$30 [US$19] on a return ticket to C$15 [US$9.50]. Not to defend the airlines, but they have likely locked in their supplies for the coming months at a rate that, while lower than in the past year, may still be higher than the current bench mark level. It always take several months for prices to average out, and while some think the surcharge was added hastily, the carriers had been losing money for several months on their hedged prices for aviation fuel. [Not to mention losing money on operations overall.] Our gas at the pumps is not based on hedged pricing, while the price paid by big users like the airlines is. So we really can't use that price level as a valid reference point.‡
Nov 27, 2001 | 6:04 pm
#8
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KCFORREAL, the phone tax goes to the government, not the phone company. When airlines add a fuel surcharge, all they're doing is labeling some of their own revenue dollars differently.
As long as a surcharge is not added after you've been quoted a price (like the hotels did!), it doesn't mean anything.
As long as a surcharge is not added after you've been quoted a price (like the hotels did!), it doesn't mean anything.
Nov 27, 2001 | 9:17 pm
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<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by newself:
Does this mean that LarryU is not going to fly anymore?
</font>
Does this mean that LarryU is not going to fly anymore?
</font>
Dec 14, 2001 | 8:59 am
#15
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FUEL SURCHARGE: DON'T BLAME THE AIRLINES
Even though fuel prices have dropped in the last year, the airlines aren't wrong to maintain their $20 surcharge, writes Ed Perkins. The real culprits are travel companies that don't disclose their hidden fees. Here are a few common scams to watch out for.
http://rd.SmarterLiving.com/da121301.15
Even though fuel prices have dropped in the last year, the airlines aren't wrong to maintain their $20 surcharge, writes Ed Perkins. The real culprits are travel companies that don't disclose their hidden fees. Here are a few common scams to watch out for.
http://rd.SmarterLiving.com/da121301.15