Peak airline travel surcharges imposed by legacy carriers, all summer long

by Charlie Leocha on May 27, 2010


I promise, I’ll ask the airlines why they are resorting to a blanket summer travel peak travel surcharge rather than simply raising the fares. I’m sure there is a reason, but this is one more thing that makes figuring out airfares complicated.

The major legacy carriers all announced, seemingly within minutes of each other that they will add surcharges ranging from $10 to $30 for one-way domestic flights on almost every day between June 10 and August 22.

The 4th of July was left out. It seems that few travel on Independence Day.

The airlines have toyed with this system of surcharges before. They began by imposing surcharges around the Christmas and New Year high-travel days. They they decided to spread the surcharges to virtually any high-demand travel such as Easter, spring break, Memorial Day and I forget what others.

Evidently, the test has worked well. Why pick and choose what days to add surcharges? This summer, the major airlines are doing it the other way — they are picking and choosing the days when there will be no surcharges.

However, whatever the airline call these surcharges, since they are not optional, consumers should know that the advertised cost of travel will include the airfare and the peak travel day surcharge. From a consumer point of view, this will look like an increase in the airfare, which it is.

I’m still wondering why the airlines choose to add surcharges this way instead of simply changing the airfares. Do any or you know how they are playing this game.

Next week, I’ll have time to dig into this, but I’m open to explanations in the meantime.

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Tagged as: airfares, airlines, surcharges

  • John Baker

    Charlie .. Do you know what the DOT ruling on surcharges is? This might be a tax dodge like we’ve seen before (Higher fares would be taxed at the higher rate instead of surcharges being taxed at the lower rate like baggage fees).

    Just a thought

  • http://www.tripso.com/author/leocha Charlie Leocha

    This peak-day surcharge is taxable as non-optional according to the IRS definition of what must be included in the transportation excise tax and what is exempt. Baggage charges are optional and thus not included because passengers can decide to take a bag or not. I don’t think it is a tax dodge. That’s what makes it so puzzling.

  • Jeff L

    I looked at it as a programming/processing issue. Right now, fares are set into buckets via advanced yield management systems. Rather than try to change the complicated math behind those systems, instead you could have a simple table that has a date and a surcharge amount, which is added to all fares for that date. Much easier to implement and maintain.

  • Hapgood

    The answer to the question is so obvious that I don’t know why you even bother asking it. The surcharge lets them raise the cost of flying while continuing to advertise a deceptively low fare. It’s a way to have their cake, eat it, and make their executive bonuses even fatter.

    In any other industry this would be called “bait and switch,” “deceit,” or any other variations on “fraudulent advertising.” But since it’s the airlines, it’s just business as usual. The fat-cat executives can be sure their customers will be back begging for more no matter how much they’re cheated and abused.

  • http://www.tripso.com/author/leocha Charlie Leocha

    @Hapgood That’s not true. DOT required that these kinds of surcharges be included in the advertised prices. Luggage, seat reservations, no.

  • http://www.tripso.com/author/leocha Charlie Leocha

    Here is an explanation from one of the airline PR folk I work with:

    “It is completely transparent to the customer and simply shows up in the total price of any fare they see PRIOR to making their purchase decision. It is simply a different way of filing a fare change that is less cumbersome administratively to file in situations where it is aimed at specific dates (in this case an increase based on anticipated demand – and we do anticipate increased travel demand this summer).

    It is somewhat difficult to fully explain the fare filing process, but I’ll try for a shorter Reader’s Digest version. I’ll start with regular fare filings. All airlines file fare changes several times a day through a huge computer clearing house called ATP. Routine filings involve literally millions of fares because it covers thousands of origin and destination city pairs…and that is multiplied out for 330 days (how far out from a flight we will sell you a fare prior to the flight – 11 months. It is a massive filing and it is sometimes difficult to constantly monitor due to many other airlines constantly and routinely doing the same thing – and we always are competitive with every fare and city pair market we compete in.

    Fare surcharges of any type (a fuel surcharge would be another example) are filed differently. They are filed in the “rules” portion of the fare and do not change the base fare itself. So we can do a much simpler fare filing in the rule of specific fares on specific dates. It is easier to file and easier to monitor as well for competitive responses.

    It is important to remember that this has NO effect on the customer. The fare for sale they see is the bottom line fare no matter how it was filed. It is transparent to the customer who sees the fare for the day and flight they choose PRIOR to making any purchase decision. If they like the fare, they can buy it. If they do not, they may choose to not buy, of course.

    Bottom line as I mentioned before: this is a less cumbersome fare to file and monitor administratively when the filing involves a relatively small number of fares and specific dates. To the customer, it is transparent when displayed.”

  • Jake

    The PR rep states that “fare surcharges of any type (a fuel surcharge would be another example) are filed differently. They are filed in the “rules” portion of the fare and do not change the base fare itself.”

    Which is to say that this increase WILL NOT show up as the fare displayed in search results, only at that last disclosure step prior to clicking “purchase”, where the rest of the surcharges do. My guess is that, as a surcharge, it is also non-commissionable, so it ends up being a hidden way to raise fares while at the same time not having to pay commission nor honor corporate travel discounts on the increase. And the fact that all airlines did this within minutes of each other…what more do they have to do to prove collusion?

  • http://leftcoastsportsbabe Janice Hough

    Jake is exactly right, the customer or travel agent sees the total before purchasing the ticket, but not in the original fare display. And there are indeed no discounts on these surcharges, making them more profitable. Since consumers seem to accept these fees, I think it’s only a matter of time until the “peak day surcharges” rival the so-called fuel-surcharges for being a significant fraction of the ticket cost.

  • TSA Luver

    The reason is that the airline execs are dishonest scum.

    Is it any wonder that people generally have no sympathy whatsoever for the airline industry?

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  • MeanMeosh

    FYI – there is one way to figure out the all-in price without having to actually scroll all the way down to the purchase screen. Kayak will show you the total including taxes and fees when you do a search. Much easier than having to flip through several screens on multiple websites.

    Now, that doesn’t make the surcharge any less annoying – it still is, because it provides for a misleading price in the fare display. Mark my words – we’re headed for “Indian style” fares on all major carriers, where your $326 roundtrip consists of a $1 base fare plus $325 of taxes and fees. This was a major source of annoyance in India until the government finally told the airlines they had to stop and include all taxes and fees in their initial fare display (you’d be all excited about flying somewhere for a quarter, or something ridiculous like that – until you saw the $75 of “fees” at the end when you got ready to pay).

  • Bodega

    I just issued a ticket for summer travel and found no surcharges.

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