beaubo

1. Have you recently had to pay a fuel surcharge on any airline award redemption?
(You have answered this already)
34.5% Yes
65.5% No


2. What do you think about the additional fees (fuel surcharges) on flight awards?
(You have answered this already)
4.8% Not that big a deal
33.2% Whatever happened to my "free award"?
20.3% Reasonable, given the current cost of oil and jet fuel
41.7% I already paid the extra fuel surcharge when earning the miles, why do I have to pay again?


3. What are the first words out of your mouth if I tell you that award fuel surcharges can be nearly $400?
(You have answered this already)
58.4% $%&@!#$$
27.9% You're kidding ...
6.8% OMG (if text messaging)
6.8% Hey, it's cheaper than buying a ticket


4. Be honest. Would you change frequent flyer programs solely based on additional fees, such as a fuel surcharge for awards?
(You have answered this already)
56.5% Yes
43.5% No

beaubo

RP Intro Remarks in June Inside Flyer notes that fuel surcharges will be focus of July issue.

BRAVO!

essxjay

"Page One" of what? I don't see anything on the first page of this thread, this forum or the top level forums page.

thadocta

Poll is at http://www.flyertalk.com/ - over on the left hand side.

Dave

hfly

I thought I'd just re-post here a little mathmatical exercise that is on the fuel charge thread on the AF forum. It demonstrates that at least in the case of AF (I haven't had the time to run the numbers on other airlines, but it would seem to apply in the same way to all the big carriers), that they are making money hand over foot from these charges:

I thought I'd just conduct a little exercise:

On May 19, 2004 when AF started these surcharges, the Dollar was trading at $1.19 to the Euro. Today it is 1.58.

At the time that AF started charging this surcharge oil was trading at 30 bbl. I should note that Af's final price for the year was $35 bbl

Now a one way flight (CDG-JFK) on a B777 uses about 15,000 gallons of gas, this has remained constant over this time period.

Their load factor on Transatlantic flights has averaged somewhere around 82% for this entire period.

Their 777 fleet averages about 310 seats per plane (although they operate some high density 777's with as many as 472 seats per plane on some routes). Therefore the average load is 257 pax (and change)

For the year 2004-2005 AF's final price per barrel was $35
For the year 2005-2006 AF's final price per barrel was $41
For the year 2006-2007 AF's final price per barrel was $51
For the year 2007-2008 AF's final price per barrel was $57
For the year 2008-2009 AF's final price per barrel it will be (est) $82


The average EUR/$ rate for 2004-2005 was $1.27
The average EUR/$ rate for 2005-2006 was $1.21
The average EUR/$ rate for 2006-2007 was $1.30
The average EUR/$ rate for 2007-2008 was $1.45
The average EUR/$ rate for 2008-2009 will be (est) $1.54

AF reports in Euros and the majority of their transactions are in Euros, therefore the "real" cost bbl for them has been:

27.55 EU in 2004-2005
33.88 EU in 2005-2006
39.23 EU in 2006-2007
39.31 EU in 2007-2008
53.24 EU in 2008-2009 (est, however they do have 75% hedged at $74 a barrel so its a safe estimate).

As one can see, in constant EURO terms the cost of fuel for AF has not even DOUBLED, while the "consumer" price has more than quadrupled.

Furthermore not only has the fuel surcharge increased from 3 Euros ($3.81) per segment (Long Haul) during this period to 83 Euros ($127) per segment today.

Now for the kicker. At AF's Load average on the route, citing the a/c above at the above rate and capacity (257 pax avg), they use appx 58.36 gallons of fuel per passenger OW. It can be assumed that AF's cost per gallon (2004-2005) for Jet A was $1.10 (.964 EURO cents) per gallon (its a bit hard to work out as its easy to find their bbl final price, they don't seem to break it down on a per gallon cost), therefore the cost one way was $64.20 (54.87 EURO) per person for the flight. As we have seen from the above their EURO cost has just about doubled in that time to about 106 EUROS ($163.24) per person per segment (and this is even looking forward into next year).

Notice that the actual fuel cost has only increased by 46 Euros per segment during this time (vs. the 103 that they charge). One however has to also factor in the fact that AF has raised fares SEVENTEEN TIMES outside of these increases over the period. Its a huge windfall as the surcharge exceeds their increased cost by almost 250%.

Anyone who wants is free to pick apart my math and see if it makes sense. I partially ran this on a random short haul flight and it wored out similarly. I really wonder why no investigative journalist hasn't done something similar.....

nsx

You may be overthinking this. I'm no fan of fuel surcharges, especially on award tickets, but let's suppose that the airline wants to use that surcharge to restore its effective fuel cost to the times of $35 a barrel oil.

Oil is priced in dollars. How much has the dollar price of that 58 gallons increased? How much in dollars has the fuel surcharge increased? Is the surcharge recovering more that 100% of the fuel cost increase?

hfly

AF/KLM is a European company, they report in EUROS and the majority of their revenues are in EUROS. Perhaps what I wrote was too long winded for you. In DOLLARS their fuel costs have a little less than doubled (neither the bbl cost, nor what you pay at the pumb really mean anything here, they buy Jet A and they not only effectively hedge but have published what their final costs are for each year fuelwise). Anyway they are much more than recovering their increased cost and to simply answer your question, although it can be found above, they are not only recouping the increase, but making a further profit of at LEAST 250% of the increase in cost, not to mention the fact that they have also increased fares seventeen times in the period NOT including fuel surcharges.

nsx

If the fuel cost increased from 54.87 EURO per person to 106 EURO, that would justify a maximum fuel surcharge of 51 EURO. So a 100 EURO fuel surcharge would be a fuel overcharge.

hfly

Well its all based on their published numbers.......

jpdx

Very interesting, hfly! Thanks for sharing this! ^

Dudemon

This begs the next question, "Have you already changed FF programs due to the additional charges?"

Yes

beaubo

1. Have you recently had to pay a fuel surcharge on any airline award redemption?
(You have answered this already)
36.0% Yes
64.0% No


2. What do you think about the additional fees (fuel surcharges) on flight awards?
(You have answered this already)
5.6% Not that big a deal
36.6% Whatever happened to my "free award"?
17.4% Reasonable, given the current cost of oil and jet fuel
40.5% I already paid the extra fuel surcharge when earning the miles, why do I have to pay again?


3. What are the first words out of your mouth if I tell you that award fuel surcharges can be nearly $400?
(You have answered this already)
59.6% $%&@!#$$
26.8% You're kidding ...
6.8% OMG (if text messaging)
6.9% Hey, it's cheaper than buying a ticket


4. Be honest. Would you change frequent flyer programs solely based on additional fees, such as a fuel surcharge for awards?
(You have answered this already)
61.3% Yes
38.7% No

any007

I too am a big objector to extra charges.
I'm in the camp of surcharges are a joke.

In toronto, they regularly advertise airfares to london england for $99.
then, in small print, extra fees of almost $500.

Just post the price of $499. Then the remaining $100 is the airport and gov't fees.

Breaking out airline fees like fuel surcharges are meaningless to me.
They are just trying to advertise a low fare.

As for many other companies, like fedex, plumbers etc, showing fuel charges on their bills. They are also cheaping out by trying to show a low cost. But, in reality it's not. Business, show just charge one price.

Do you think it would be right for a supermarket to post a price of $1 for a dozen oranges, but $5 as a fuel surcharge to truck them there? They could also post $6 for a dozen oranges, or 1 cent for a dozen oranges and $5.99 as a fuel surcharge. It's just numbers and cost manipulation to me. In reality it's $6 for dozen oranges.

If fuel prices ever retreat, I'd have my doubts the airlines would really reduce their prices overall. the fuel charge might go down, but I would expect the base price to rise.
(ok, I'm cynical)

beaubo

more perplexing stuff....

CLE-EWR-TLV RT on CO
* taxes using CO miles about $70
* taxes using AF miles about $545

DTW-DEN RT on NW
* taxes using NW miles $5
* taxes using AF miles $152

I asked AF if they reimburse CO and NW the fuel charges, they advised that they weren't sure. I advised that CO and NW aren't likely expecting AF to reimburse them, as CO and NW doesn't get a fuel charge from their OWN FFP members.

BTW on the CLE-EWR-TLV flight- taxes in Y were $545, a paid flight was $1777.

beaubo

Well, the splendid isolation of US FFPs not charging fuel surcharges on award tickets has officially been breached.....

http://www.flyertalk.com/forum/showt...=839109&page=4