Airlines misuse fuel surcharge

SAS Airbus A321
SAS expect a decrease in fuel costs

Even that the cost of a barrel of oil has fallen from over $110 last year to $40, most airlines continue to charge an additional $25 to $450 per ticket for fuel.

Now The United Federation of Travel Agents Associations has written to the international airline body IATA to ask why carriers are continuing to add fuel surcharges to ticket prices when the cost of fuel has plunged.

In an open letter to IATA, it claimed that IATA’s own sources had estimated airlines’ fuel bills would fall this year by $4 billion.

“Generally the cost for the fuel should as soon as convenient be included in the general operation cost e.g. air fare (no air-plane can fly without fuel),” it wrote.

“However, airlines continue totally shameless to misuse this ticketing loophole and thus manipulating the transparency of the ticket price. The ‘tax box’ on the tickets has increasingly become a vehicle for various extra charges not included in the basic air fare either to distort the price transparency or perhaps to serve as a loophole for tax evasion?” it added.

“How long will this charade be tolerated by the consumers?”

But neither SAS nor Norwegian plans to abolish the fuel surcharge:

Trine Kromann-Mikkelsen, Communications Director, SAS;

”As reported in our third quarter financial report, SAS’ fuel costs decreased only 114 MSEK compared to last year. For the fiscal year’s first nine months our fuel costs increased with 393 MSEK compared to last year. This is mainly due to currency increase – the expensive dollar – and to higher cost for hedging in the beginning of the year. This is in line with other airlines using the same accounting standard as SAS, “says Trine Kromann-Mikkelsen.

“Seeing that our fuel costs have increased, and we have experienced an increase in environmental charges primarily in Norway, we haven’t changed the fuel surcharge yet, but we continue to follow the market development. Currently, we cannot specify any time for possible changes.

Looking ahead we expect a decrease in fuel costs, provided that the fuel price and the dollar will not increase.

Regarding our revenue on fuel surcharges this information is disclosed. The overall price on tickets decreased last year despite no changes to fuel surcharges. This is just to say that the price the consumer pays is affected by many other factors than the surcharge level.”

Norwegian

Norwegian has no plans to abolish the fuel surcharge.

Price on the route Stockholm – Rome is 3.566 SEK. Oil supplements 287 SEK.

On a flight from Copenhagen to Orlando the price is 8,333. Oil supplements 471 DKK.

“Last year, we removed the fuel surcharge on many of our routes – including mix domestic, intra-Scandinavian – and some European routes. It is evident in the ordering process, how much fuel surcharge is.

The fuel surcharge is not the same on all routes. Norwegian will maintain the fuel surcharge. It is true that the price of fuel has gone down, but at the same time, the Norwegian kroner have weakened sharply against the dollar and the euro.”

“How much do Norwegian gathered to collect fuel surcharge?”

“All financial figures that we provide will be seen in the reporting of monthly, quarterly and annual results;” says Daniel Kirchhoff, Head of Communications, Norwegian, Denmark.

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