Jet fuel plunges, but surcharges are here to stay
Filed under: Transportation, Travel
Until this summer, I didn't consider a domestic flight a good deal unless it was under $100 for a one-way ticket. Since June, though, I know I'm lucky if I can find a flight anywhere that won't cost more than a mortgage payment.
A new study from USA Today shows exactly how much those prices have gone up because of fuel surcharges:
Prices jumped sharply when jet fuel prices took off and airlines were forced to increase fuel surcharges in ticket fares. But now jet fuel is down sharply, comparable to last year's prices, yet the high prices remain all across the industry. What gives?
Outraged travelers accuse airlines of greed, but the airlines argue the surcharges are still necessary. A Northwest Airlines spokesperson says that prices "continue to exceed the surcharge levels in place," adding that many existing surcharges were not in place when oil was at its record high earlier this year. Other airlines say that the surcharges they were charging when jet fuel was at its high of $4.34 per gallon in July could not keep up with the costs to the airlines, so that now even though jet fuel is down below $2.40 per gallon, they are still trying to catch up with all the costs incurred over the summer.
That's why, the airlines say, fuel surcharges are up so much. In fact, these charges are up across the board, according to research by FareCompare.com, with an average increase of 60% over last year's numbers. And despite these higher fees, the airline industry still expects to lose billions of dollars this year.
The number FareCompare crunched for USA Today include ticket prices for 75 non-stop overseas routes, and none of the major players came out looking so good to consumers: Surcharges double on one or more routes for the four major U.S. airlines since last year. The biggest increase was for Thai Airways L.A. to Bangkok route, up 185% since last year.
You can get angry and call it a money grab if you want to, but most airlines simply call it "staying in business." The good news for travelers is that costs are falling for the airlines, and they are slowly cutting some fees. So far these cuts have not amounted to much, but some industry experts expect to see a gradual but steady decline in fuel surcharges as jet fuel prices decline.
A new study from USA Today shows exactly how much those prices have gone up because of fuel surcharges:
- Los Angeles to Bangkok -- up $352 over last year's fuel surcharge with a fuel surcharge of $542
- Washington, D.C to Tokyo -- up $400 over last year thanks to a $630 fuel surcharge
- New York to Dublin -- up $138 over last year because of a $230 fuel surcharge
Prices jumped sharply when jet fuel prices took off and airlines were forced to increase fuel surcharges in ticket fares. But now jet fuel is down sharply, comparable to last year's prices, yet the high prices remain all across the industry. What gives?
Outraged travelers accuse airlines of greed, but the airlines argue the surcharges are still necessary. A Northwest Airlines spokesperson says that prices "continue to exceed the surcharge levels in place," adding that many existing surcharges were not in place when oil was at its record high earlier this year. Other airlines say that the surcharges they were charging when jet fuel was at its high of $4.34 per gallon in July could not keep up with the costs to the airlines, so that now even though jet fuel is down below $2.40 per gallon, they are still trying to catch up with all the costs incurred over the summer.
That's why, the airlines say, fuel surcharges are up so much. In fact, these charges are up across the board, according to research by FareCompare.com, with an average increase of 60% over last year's numbers. And despite these higher fees, the airline industry still expects to lose billions of dollars this year.
The number FareCompare crunched for USA Today include ticket prices for 75 non-stop overseas routes, and none of the major players came out looking so good to consumers: Surcharges double on one or more routes for the four major U.S. airlines since last year. The biggest increase was for Thai Airways L.A. to Bangkok route, up 185% since last year.
You can get angry and call it a money grab if you want to, but most airlines simply call it "staying in business." The good news for travelers is that costs are falling for the airlines, and they are slowly cutting some fees. So far these cuts have not amounted to much, but some industry experts expect to see a gradual but steady decline in fuel surcharges as jet fuel prices decline.
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Reader Comments (Page 1 of 2)
10-28-2008 @ 2:22PM
John said...
I guess with the government bailing out another industry with our tax dollars the airlines know they better not be looking fro handouts anytime soon.
Did none of these CEOS have 4th grade math? you know word problems?
If a stadium holds 1000 people. For $5 you sell out BUT for each dollar you raise the price of a ticket you lose 100 people so whats the best price to maximize profit?
They cant figure out how many seats to have, and how much to charge to get the most for their money. Instead they make it a miserable experience to fly and charge you for EVERYTHING and then wonder why people complain about them and are po'ed when the government helps them out of bankruptcy.
Reply
10-28-2008 @ 6:16PM
Jon Boy said...
This is crap, Gas has dropped like crazy, so should everything else.
Read some interesting here http://curiousread.com
Thanks
JonBoy
10-28-2008 @ 2:25PM
justpicky said...
Research before committing to airline tickets .
Nothing cheap .
You want anything , you've to save for it .
Best to pay cash / credit card , depends
on what you buy .
You can't depend on anyone , companies ,
etccc , Time has changed .
No job on this earth , will last forever , those
days are gone .
Make the best of your life .
I think congress / senators should help every middle class
person on this earth . If they would give each middle class
one million dollars ( 18 + ) Each , they will help the economy faster . they can pay there own mortgage , buy a home , pay there college off , save for college for there children . Jobs would help people too . Believe me , that money will circulate faster than you realize . If only they would list to my proposal .
At least the main citizen will recieve it and companies will end up putting money in there own pocket instead of helping others. If only they will read and understand , what millions of people are telling senators , congressmen / women , HELP MIDDLE CLASS , THEY DESERVE IT . PUT PEOPLE BACK TO WORK . NONE OF THEM , ASKED FOR THIS .
Reply
10-28-2008 @ 2:27PM
Scott Kochman said...
Are airline prices fair? Well, maybe the total amount is the right price to charge, but when the fare is $544 for a round trip from New York to Rio, and you click on BUY and it becomes $944 with taxes and surcharges (not to mention food, baggage check, pillows and in-flight entertainment), then there is a problem. If it's going to cost $980, then charge $980. We've had enough of these games.
Reply
10-28-2008 @ 3:05PM
Susan said...
Instead of paying the higher fares, just say "no" and not fly for a while! Some people's demand for flight is "inelastic," so they must pay the price; but for many of us we do NOT really have to fly. Sure, you want to go 600 miles over Thanksgiving to see Grandma, but why not forego the trip this year, or take the train or bus? We tend to forget that we are not always "forced" to pay what the "Seller" asks. We can refuse to give in, and the provider of goods or services will have to go under or find a way to keep the costs and prices down.
Reply
10-28-2008 @ 3:23PM
B Van Wormer said...
It's simple, using less gas reduced the price of gasoline in the U.S., flying less often will reduce the ridiculous add-on charges the Airlines feel entitled to screw the traveling public with.
Reply
10-28-2008 @ 3:58PM
Jack Fisher said...
I have my personal plan for holding down airfares...I wouldn't get on one of those rip-off airline's planes...Period! They lie through their teeth...Think about it: Would you run a business where you always lost money and do so for years? When is the last time an airline said they were profitable?
Reply
10-28-2008 @ 4:01PM
Angiebaby said...
Well, hell... who ever thought ticket prices would go down???
Reply
10-28-2008 @ 4:14PM
MsRe said...
In this current climate wherein all the companies have gone greedy, especially the stupid airlines, I am opting to either drive, take a train or insist that people come to see me. The airlines greed and more CEO spectacular bonuses is NOT something I want to support. If we all did this, they would change their tune.
Reply
10-28-2008 @ 4:31PM
greg said...
One of the biggest problems people don't understand is the airlines are merely the collector's of all of the taxes that inflate every ticket price. On a $300 ticket, some $80-$100 more are taxes.
Reply
10-28-2008 @ 4:33PM
Brad said...
Didn't the government bail out the airlines once upon a time? That worked so well think how well their bailout of the mortgage companies will do.
Reply
10-28-2008 @ 4:40PM
Gerry said...
The air travel industry is headed for the same fate as US Auto Manufactures. Auto Mfgs caved in to the Labor Unions at contract time and agve them more and more for doing the same job. Now they are almost out of business. Customers are the Unions of Air Travel. We want cheap air travel and we refuse to believe that the companies are losing money. Well if you simply calculate the cost of filling a 727 jet with fuel, never mind, pilots, crew, airport ramp costs, maintenance, cleaning aircraft inside and out, ground crew, baggage handlers, check-in staff et. Then fill the plane with passanger at the average cost of a ticket. The multiply the total fares and compare the result to the cost. You will quickly see that the cost of the fuel isn't cover, much less the rest of the costs.
Wake up folks, if you want to fly you will have to pay the real costs, otherwise, NO MORE AIR LINES= you drive or walk.
Reply
10-28-2008 @ 5:38PM
Jim Rosner said...
Forget you! I will drive, take a bus, or take a train...you pro-airlines people can look for a job.
10-28-2008 @ 5:22PM
Bill said...
Just so you are aware, for every penny fuel went up, as painful as it was to consumers, it cost the airline $11,000,000.00 to get the planes in the air. So for the time that airlines were holding their costs to the consumers, they lost money. If fuel went up 10 cents at a time, like it did at the pumps, that means it went up $110,000,000.00 to the airline.
Reply
10-28-2008 @ 6:08PM
ryan said...
if you dont like it dont fly. its that simple!
Reply
10-28-2008 @ 7:40PM
TINA said...
HEY HOW OLD ARE YOU, AND DO YOU FLY OR DOES MOMMY AND DADDY PAY FOR YOUR FLIGHT, IF THEY PAY FOR YOUR FLIGHT THEN SHUT-UP OTHERWISE IDIOT ASK PEOPLE WHO TRAVEL 3 OR 4 TIMES A YEAR, ARE YOU THAT LUCKY.
10-28-2008 @ 6:16PM
Joseph Myers said...
What is sad is the history of our subsidizing airlines -- for years -- and ending up with an industry which serves us so poorly. The mess created by the "homeland security" response to 9-11, the insistence by airlines on making travel unbelievably uncomfortable for all but first/business class, the delays, overbooking flights, etc. -------- If something is within 300 miles, it takes me no more than an extra hour to get there by driving. We aren't nearly as safe on planes as we should be, either -- the deregulation of the airlines and cutting staff of FAA and other agencies has allowed many companies to cut corners on safety. Flying used to be fun, now it is a necessary evil. What we should subsidize is European-style train high-speed train travel. And we ought to own the tracks as a nation.
Reply
10-28-2008 @ 6:54PM
Alex said...
So the airlines say they did not charge enough earlier this year, and they want us to pay for that?
If you went to the store, would you want to pay someone else's bill to get your groceries?
I'm sorry, the last customer got a steak for two dollars less than they should have. I'm going to have to ask you to pay the rest of their bill...
Guess I'll have to put off flying yill they "catch up".
Reply
10-28-2008 @ 7:47PM
David said...
I live on a Caribbean island. If I want to go anyplace, I HAVE to fly. Let's do a little math., and maybe we can see that some airlines ARE gouging the flying public. Two scenarois: Both are U S airlines, flying between U S points, however they are U S Territories...airfares quoted were as of today at 1200, so, they may have changed at any time...first up is St. Croix to San Juan, Puerto Rico on Executive Airlines d.b.a American Eagle. Aircraft is an ATR 72. Seating capacity is 64 people. Distance flown is 94 miles. Lowest published airfare between these two points is $287, including taxes. NEXT: Saipan to Guam on Cape Air d.b.a Continental Express. Aircraft is an ATR 42. (Identical aircraft to American Eagle except for seating capacity)...Seating capacity is as stated, 42. Distance flown is 126 miles. Lowest published fare between these two points is $139 including taxes. Fuel in Saipan is shipped in from a refinery in Singapore, well over 1000 miles away. Fuel in St. Croix is refined at the Hovensa Oil refinery less than 3 miles from the airport, and trucked over in less than five minutes. Can anyone tell what's wrong with this picture I'm painting??????
Reply
10-28-2008 @ 7:58PM
H. Cook said...
We have decided that if the drive is 10 hours or less, it's easier to drive than fly. From the time you leave your house, check in, go through security and wait for your flight, have your almost mandatory layover, get to your destination and retrieve your luggage, the time is pretty much the same. Why bother flying unless you have to? The fuel surcharge is one thing, but charging for even one bag has gone too far for me. Flying used to be a wonderful experience, but the nickel and diming mentality makes me want to stay away. I used to fly over 50,000 miles per year. No more.
Reply