Another airline is lowering its unpopular fuel surcharge. Lufthansa announced this morning it will reduce its energy fee by $3 to $100, depending on the route. The move follows several unofficial fuel surcharge reductions we reported earlier today.
It’s about time.
Crude oil futures are dropping like there’s no tomorrow. (Hat tip to our friends at The Big Picture for the visuals.)
The Lufthansa release says it all:
As crude oil and kerosene prices have decreased, Lufthansa will reduce its fuel surcharge on its flights.
The fuel surcharge on domestic German and intra-European routes will decrease by three USD to 32 USD per flight segment. On long-haul routes the corresponding fuel surcharge will be decreased by five USD to 100 USD per flight segment. The reduction will apply to all Lufthansa tickets issued on or after October 20, 2008.
Lufthansa continuously monitors oil prices and will make any future adjustments to the fuel surcharge dependent on further trends in the price of jet fuel.
How long before domestic airlines wake up and realize that the many surcharges they’ve forced on their passengers in the name of higher fuel prices won’t fly anymore?
If you said “never” you’re right.
{ 6 comments… read them below or add one }
So, they lower fees less than 5% on a surcharge that should be included in the price of a ticket and we should be happy?
How about this? Oil prices have dropped over 40% from their high in April and we get less than 5% lower on the surcharge?
This is a start, but it still isn’t right.
If we accept that, we’re all idiots.
Hmmm, SOUTHWEST just posted a LOSS today. And, they HEDGE FUEL.
What’s wrong with this picture?
Continental Airlines says it swung to a $236 million loss in the third quarter from a year-ago profit as it battled high fuel costs.
Continental says jet fuel, one of its top expenses, cost it $606 million more in the latest quarter that in the 2007 period.
The Fort Worth Star-Telegram writes “the Dallas-based airline said it lost $120 million during the quarter, after having to record a $247 million charge to reflect the drop in value of its hedging contracts, which allow it to purchase jet fuel in advance at predetermined prices. Under accounting rules, the airline is required to reduce the value of the contracts on the books if fuel prices are falling.”
Sure, it lost money because it gambled that oil prices would stay high…they dropped, so accounting rules force them to post a one time loss.
But that wasn’t my point. The airlines raised these surcharges because fuel got expensive. Now that fuel is cheaper, we should see more of a corresponding change in surcharges. My issue was with the discrepancy between a 40% drop in oil prices and only a 5% drop in fuel surcharge.
If it was strictly for fuel prices, the cost should come down with fuel prices. I say it is not really a fuel surcharge, but it is a below the bottom line fee for the airline. A way to increase prices without having to look like they raised prices.
I have no problem with a business making an honest buck for an honest product. In fact, if airfares are too low to maintain the business, raise the fares.
But remember also that the airlines absorbed the fuel increases for a long time prior to them adding surcharges. So just because fuel drops in a few weeks, doesn’t make up for the months (year or more?) they absorbed them. They are still recooping the increases.
If it stays down a while longer you will see more cuts.
Also, for domestic fares, the DOT requires the airlines to fold them into the base fare, so that is what happened. They couldn’t add a surcharge, they raised the fare.