Tue, Nov 11, 2008
But Curiously, Airfares Increase As A Result...
In explaining to consumers why all the new ala carte fees were
required, airlines pointed to market resistance to the higher fares
which would be necessary to cover their increased costs for fuel.
Now that fuel costs have fallen again, a curious thing is happening
to fuel surcharges.
Airlines in the US last week eliminated or significantly reduced
fuel surcharges on many domestic routes... but increased their base
fares by a comparable amount. An analysis by FareCompare.com for
USA Today shows many travelers are paying the same as before the
change.
American Airlines was among the first to eliminate fuel
surcharges on most domestic flights. As an example, a round-trip
flight on American from Dallas/Fort Worth to Washington, DC, booked
14 days in advance, had a base fare of $680 dollars, plus a $170
fuel surcharge, for a total of $850.
The surcharge has now been removed, but the base far has now
jumped to... you guessed it... $850 with no added surcharge.
Rick Seaney, CEO of FareCompare.com, says the change will
provide "a bit more transparency" in prices, and adds what may be
obvious -- that the fuel surcharges were not so much about fuel,
but "had everything to do with competition and the need to raise
ticket prices."
US Airways spokeswoman Valerie Wunder appears to concur. She
advises consumers that what really matters is the overall cost of a
flight, not whether part of it is called a "surcharge."
"We still need to be able to charge enough for our product to be
profitable, and we aren't there yet."
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