Sky-high fuel surcharges stick despite sliding energy prices

By | August 13th, 2008

Energy prices may be falling, but airline fuel surcharges are holding steady — if not rising.

The fees on tickets to Europe this autumn were already pretty high, ranging from $342 to $474 per ticket, according to sample fares from Bestfares.com. That figure doesn’t include landing fees and taxes of about $258 (but that’s another story).

But jet fuel prices are headed down, dropping from $3.64 per gallon on July 29 to $3.39 per gallon on Aug. 4, according to the Energy Information Administration. This has triggered widespread speculation that fuel surcharges would fall, too.

Wrong.

The winter fares to Europe — also courtesy of Bestfares.com — show the exact same fuel surcharges. Meanwhile, the base fares have dropped by about $200, as they do during the off-season. So proportionately to the fares charged by the airlines, the fuel surcharges have actually risen.


Many airfare experts believe airlines will eventually lower their fuel surcharges, as energy prices continue to decline. But the fares currently being offered seem to contradict the conventional wisdom. They suggest airlines have unbundled energy costs from their base fares, and probably have no intention of folding their fuel costs back into the price of a ticket.

We already know that airlines plan to do this with non-fuel-related surcharges. If they can get away with it on fuel fees, too, it may not be long before base fares are pure profit.

Time to buy airline stock? Perhaps.

(Thanks to my friends at the San Antonio Express-News for the tip.)

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