Airlines Reluctant To Part With Revenue Stream
If an airline imposes a "fuel surcharge" above and beyond the
normal fare to compensate for record fuel prices, it's hard to
argue with that. The assumption, of course, is that if jet fuel
prices fall nearly in half, the surcharge will be reduced or
If the airlines keep collecting those fees after fuel costs fall
nearly in half over a six-month period, and make excuses for
keeping them in place, is it fair to call them "fuel surcharges?"
That's the point US Senator Robert Menendez, New Jersey's Democrat
junior senator, is making to 11 US airlines.
Newsday reports Menendez has sent letters calling on the
airlines to discontinue the fees, which were blamed on fuel costs
when imposed. He notes the price paid by airlines for jet fuel
averaged $2.34 a gallon last week, down 45 percent from an average
of $4.33 in July.
"It's deceptive to say you still need a fuel surcharge when
aviation fuel prices are down $2 per gallon," Menendez said. "It's
It may be tough to get the airlines to let go. Industry rhetoric
seems to suggest that rising fuel prices were simply another
opportunity to add a revenue line to the budget, not directly
linked to fuel costs.
David Castelveter, a spokeman for the American Transport
Association, an airline trade group, told Newsday the decision on
removing surcharges will be made, not in response to actual fuel
prices, but rather by market forces. "The US airline industry
continues to operate with uncertainty. We're going to lose several
billion dollars this year," he said.
Gerard Arpey, CEO of American Airlines parent company AMR,
observed last week that it would be "shortsighted to conclude that
fuel prices, which remain volatile, are no longer a challenge."
AMR VP Beverly Goulet recently bragged to stock analysts that
fees, including those levied for fuel and checked bags, are
bringing in "several hundred millions of dollars" for her
All this raises the question -- If the fuel charges are staying
put because passengers seem to pay them without complaint, why
didn't airlines just raise the base fares, and skip all the hidden