Worse than taxes or fare hikes — is it time to regulate fuel surcharges?

by Janice Hough on January 7, 2014

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As most travelers know, airline regulation has been a mixed bag for fares. Recently, the government has stepped in to require airlines to at least be honest in their pricing. But to my mind, the most dishonest part of an airfare is not the fare but the mandatory, and seemingly arbitrary, fuel surcharge.

In brief, fuel surcharges, while perhaps originally a justifiable response to the spiking cost of jet fuel, now go nowhere but up, regardless of those fuel prices. In many cases the surcharge is more than the fare itself. For example, a San Francisco to London fare this month could be as low as $291 roundtrip, with a $458 fuel surcharge. Plus, the surcharge is non-discountable with sale fares, including children fares, and non-commissionable to consolidators and travel agents.

In addition, at this point the fuel surcharge seems to have little connection to actual fuel prices. Gas prices were pretty flat in the last year, but the surcharges go nowhere but up.

Airlines also claim fuel surcharges aren’t really part of the fare, but they are refundable only when the ticket itself is refundable. Otherwise, the carrier keeps the money, unlike “real” taxes, which are generally refundable even if the ticket isn’t. And, in a recent case with Lufthansa, our agency discovered it could be worse.

We had issued a non-refundable discount business class ticket from San Francisco to Delhi on Lufthansa. After it was issued, the client decided he needed to stop on the east coast both ways. So he did a separate domestic ticket on United. Then, we reissued a higher priced business class fare from JFK to Delhi, returning to Washington, D.C..

The new ticket total was $9,189, the old fare was $6,358, and the penalty (which we verified) was $450. So the change cost a significant amount of money, but since he was being for the most part reimbursed, the traveler authorized it. No problem.

Until two months later when Lufthansa sent our agency a bill for $220.00. Now, as with most expensive changes, I had carefully checked the fare difference and the penalty. Those figures had turned out to be correct, with one issue. The new ticket, while significantly more expensive, had only a $900 fuel surcharge from the east coast, compared to a $1,120 surcharge from California. Not only was the fuel surcharge nonrefundable, but Lufthansa said we had applied the difference incorrectly towards the new ticket.

So they want us to pay the fare difference, the penalty, and a $220 difference in the fuel surcharge. Tough luck.

In short, part of the fare (that was not part of the fare) to cover something — fuel costs, which were theoretically reduced since he flew about 2,000 fewer miles each way — belonged to Lufthansa permanently once we issued the ticket. Although, had it gone the other way, had the passenger turned a trip from the East Coast to Delhi into a San Francisco to Delhi ticket, we would have had to pay the higher fuel surcharge.

What’s the rationale for all this? To my mind the age-old airline reasoning — because we can.

Is there a point at which they shouldn’t be able to do it any more?

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