Focusing on Airfare Fuel Surcharges

With all the hue and cry for transparent pricing, buyers need to look more closely at fuel surcharges.

For starters, spending on fuel surcharges probably dwarfs ancillary fees.  Why? Unlike ancillary fees, surcharges are not optional. They apply to every passenger who buys a ticket with a surcharge filed as part of the fare.  Quite different from those who may elect to pay for a checked bag or an aisle seat.

Now for the salt in the buyer’s wound – corporate discounts don’t (yet) apply to fuel surcharges.  Does this matter?  Probably not so much on domestic routes.  But on international long-hauls?  It surely does.

Matt Patterson at CWT has looked recently. “There’s no apparent rhyme or reason to these things.  Domestically, I’ve seen a lot in the range of $10-30 one-way…but there doesn’t seem to be a pattern.  However, they can easily be a few hundred dollars one-way on international flights.”

Not getting a discount on these surcharges makes no sense from a buyer’s perspective.  Fuel is an operating expense, right?  And they aren’t optional.  Yet Matt or I don’t know of any airline that is giving discounts on them.  Must be a sign of the airline’s pricing power.

Or maybe it has to do with the way these things are filed with ATPCO and then displayed in the GDS. Take a look at three ways these can be filed, and the display consequences:

Which begs three questions for you buyers out there:

  1. At what stage in the shopping/booking process do your travelers see the total cost of a flight?
  2. How much are you spending on un-discounted fuel surcharges?
  3. Could your booking system apply a corporate discount to a fuel surcharge?

Surely you want your self-booking tool to display total cost (base fare + fuel surcharge +  taxes) at the point of comparing flight options.  And surely you want your data reporting tool to capture and report these surcharges separately.

But what I bet you buyers really want is to get your corporate discount on this part of your spend.  If anybody is doing so, let’s hear from you.

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2 thoughts on “Focusing on Airfare Fuel Surcharges

  1. If you have POS/regional or global revenue goals make sure the fuel surcharge revenue being collected is included in your revenue performance.

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