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With $30 Oil, Why Do Some Airlines Maintain Fuel Surcharges?

Airline fuel surcharges have begun to largely disappear. Carriers have eliminated them as oil prices remain low. But there are a few airlines that are hanging on to fuel surcharges, and some, like Qantas, that built surcharges into their base fares and haven’t significantly adjusted them downward. Why do some airlines maintain fuel surcharges and why haven’t they shared the benefit of lower prices with consumers? There are several reasons... ( 기타...

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You sure it isn't so they can give you pilots a raise? Lol
Because they can
dee9bee 2
I agree with Matt. I also agree that the surcharge could go for now, great marketing tool. Show of hands...How many of you think that oil prices will STAY this low? All it will take is someone doing something stupid in the Middle East and oil prices will be right back where they were.
Expect surcharge to exist even if the oil is available for free !
usad 5
Most airlines obtain fuel contracts in advance and in most cases can't take advantage of downward fluctuations unless they continue for some time.
OK, let's accept your explanation. Why is it that increases happen immediately? If fuel was bought so far in advance, when the price of fuel goes up we should still get low prices while using the cheaply bought fuel.
Its all smoke and mirrors.
jwmson 4
Dave Ma 4
Gordon Gecko
It's kida like paying tolls for building a bridge, it never goes away but becomes another 'Cash Cow'later. Greed!
Airline fuel surcharges at this time are all uncalled for. I understand the reasons what the airlines are doing with their savings from the low oil prices, but we passengers should be included as well to give us some relief from the high airfares.
Railroad regulation almost destroyed the industry, harming customers above all.
That was under the ICC, currently, the Surface Transportation Board governs railroad oversight. Under the STB, unreasonable rates, fees, and surcharges are adjudicated so that customers have a voice.
To maximize profit for their shareholders. Until market conditions dictate they will not lower prices by dropping surcharge. Duh!
erisajd 2
Because they can and it is an easy profit - or -

they have fuel hedge contracts that keep their cost higher but constant -
Common between both of your thoughts is profit. Airlines are not forced into market speculation / hedging; they choose to do so to insure that shareholders are buffered by fuel price fluctuations. I am not suggesting that that purchasing on the spot market is good business, perhaps changing your use of "or" to "and" better reflects the situation. This has nothing to do with passengers and everything to do with stock prices.
Free enterprise, gotta' love it!
Probably because few people are aware the surcharges are happening. A good round of national news attention likely would make a difference.
For no different reason that gasoline companies. PROFIT - as driven by shareholder expectations. Plenty of greed to go around! This is a more complex (ie: societal) problem that "consumers vs big oil"
Much more profitable than cleaning planes and providing decent seats.
Same as the "AIRPORT IMPROVE MENT TAX) Toronto, Give me a break.
jcsjcs 1
Two main reasons haven't been mentioned in the article.

1) Fuel surcharge is often charged for award tickets. By having a fuel surcharge that sometimes is higher than buying a ticket in cash directly (special fares can come with "reduced" fuel surcharges) quite a lot of revenue is generated by something that should be free to the passenger.

2) Discounts to bulk purchasers are usually given based on the base fare, not the fuel surcharge. High surcharges effectively reduce the negotiated discount.

3) Any kickbacks or commissions will be paid based on the base fare, but not on the fuel surcharge.

Some countries have picked up on this scam and have fixed the fuel surcharge based on the current cost of fuel (Japan, Hong Kong) or outright banned a fuel surcharge on award tickets (Brazil). Most other countries are still like paradise for the airlines, though.
The prices are and will remain low for a long while, the airlines should remove the surchages as quickly as (they were to add it) when the oil prices were high...
tedtlaw 1
No moral compass just like Martin Shkreli?
It becomes a matter of the bottom line. The main goal of a business is to make money. Makes sense. They need to make money to pay salaries, buy supplies, pay utilities, etc, etc. When costs go down, they get to make more money. Yay. However . . . at a certain point, it becomes unreasonable if not gouging. I was in Samson, Alabama this past weekend to head to the Senior Bowl in Mobile. A friend's dad was complaining about having to pay $4.00 a gallon for propane even though fuel and oil prices were way down. Understandable. Why did he have to pay so much? Because the seller could charge that much. More profit and a bigger bottom line. It's not right, but that's the way it is unfortunately. I'm not sure what people can do about it either.
I am on the sellers side - ebb and flow of the market. Take advantage where you can.
The airline industry needs oversight just as the Railroad industry has where fees and tariffs that are not reasonable can be challenged and adjudicated. I realize there are some who feel this might be over-regulation by the Government, but it is the customers who win in the end.


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