What is a fuel surcharge?

A fuel surcharge is a neat accounting trick that allows airlines to raise the price of ticket without formally raising the price of ticket—too bad, suckers!

It’s a scam that allows airlines to cut commissions to travel agents, because, well, this is a surcharge and not the price of a ticket—too bad, suckers!

It’s a legalized fraud that allows airlines to get paid for award flights they are supposed to give away for free—too bad, suckers.

Boom!

Airlines began imposing fuel surcharges in 2000, but the practice really took off in 2004. Back then it was probably about fuel. The world oil prices spiked and the airlines decided that consumers would understand.

But then, somewhere along the way, things changed. Airlines realized that not only fuel surcharges were a great excuse for stealth fare increases, but that they could use fuel surcharges regardless how much fuel really cost.

Airlines struck gold! And they are not going to give it up easily. Or perhaps ever!

How Far Airlines Would Go to Protect Their Most Favorite Surcharge?

Oh, they would go as far as they have to. Including straight to a prison ward.

In 2007, British Airways was fined $546 million by the U.S. and British regulators  for colluding with their archrival Virgin Atlantic and others to fix fuel surcharges for their passenger and cargo flights.

British was not the only airline slapped with record fines. Korean Air had to pay $300 million for colluding with Lufthansa. The investigation encompassed 21 airlines around the world, including Air France, Cathay Pacific Airways, Japan Airlines, and All Nippon Airways among others. 19 airline executives were slapped with criminal charges, and some–from British Airways, Martinair, Qantas and SAS—agreed to serve prison terms. The fines totalled $1.7 billion.

Neither Lufthansa, nor Virgin Atlantic were charged or fined, though. Why? Because they promptly rolled on their co-conspirators, and thus qualified for the Office of Fair Trading’s leniency policy. Smart guys!

Dover et al v. British Airways

In 2013, a group of Executive Club members brought a lawsuit against British Airways for imposing fuel surcharges on award tickets. The case is ongoing.

Fuel Costs Plunge Syndrome

We shouldn’t think that airlines are completely indifferent to the public outcry over fuel surcharges today when the gas prices are so low. Being responsible and PR/lawsuits-sensitive organizations, airlines knew they had to do something to regain public trust and support. So they have delivered.

• British Airways doesn’t use the words Fuel Surcharges anymore. Nowadays, it’s carrier-imposed charges.
• Lufthansa’s solution was more elegant and laconic. Their version is simply international or domestic surcharges.
• Air France went for carrier imposed surcharges—probably to avoid plagiarism charges from British Airways.
• Delta that imposes fuel surcharges for flights originated in Europe opted for the wordiest version: carrier-imposed international surcharge.

See, and you thought airlines don’t care about us. Wrong!

Sarcasm Aside: Some things do change for better

• Several airlines have decided to dump fuel (or call-them-whatever-you-wish) surcharges for good.
• Virgin Australia used to have fuel surcharges on their U.S. routes. Not anymore.
• No fuel surcharges for Qantas from Australia, as well. (UPDATE: it seems as they might’ve just cut it down, will investigate)
• The Philippine government banned fuel surcharges on flights originated in the Philippines.  That’s a welcome news, since Philippine Airlines has partnerships with some excellent airlines, such as Cathay Pacific, ANA, and Etihad, among others.
• airberlin has removed fuel surcharges from all flights in Europe, to Tel Aviv, and Dubai.
• ANA and JAL regularly review actual fuel costs and make appropriate adjustments. They have considerably lowered fuel surcharges so far, and so did Singapore, although to a lesser extent.
• AirAsia has removed fuel surcharges altogether and declared that it wouldn’t convert the surcharge into the base price of the ticket. AirAsia is often a solid low cost alternative in Asia to using miles.
• British Airways (yes, even they!) have replaced fuel surcharges in Europe with a small fee.

Know other good news? Share them here.

Major Airline Award Fuel Surcharges List: The Good, The Average, The Bad, The Ugly

Hope you understand that “good”, “bad” and “ugly” are used here in reference to one thing only: fuel surcharges. Also keep in mind that even “good” airlines may and do add fuel surcharges to some of their partners, and even “ugly” airlines may not collect YQ/YR for all partners.

The Good (No YQ/YR)

• American Airlines
• United Airlines
• Alaska Airlines
• Delta Airlines (does add surcharges for flights originated in Europe)
• All Central and Latin American airlines
• SAS
• Air New Zealand
• Qantas from Australia (UPDATE: it seems they only cut it down, will investigate)
• Virgin Australia

The Average (Low YQ/YR from best to worst)

• Aer Lingus
• Cathay Pacific
• Iberia
• ANA
• LOT
• JAL
• Aeroflot

The Bad (Moderate YQ/YR)

• Turkish
• Singapore

The Ugly (high YQ/YR)

• Everyone else

Corrections or additions? Help me improve this list.

Photo by “IBE-refueling-gua” by FDV – Own work. Licensed under CC BY-SA 3.0 via Wikimedia Commons

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