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 eliminated.

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 just wrong."

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 company.

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 charges?

FMI: www.airlines.org, http://menendez.senate.gov/