Fuel Surcharges

Fuel Surcharges

“Loyalty” programs have become “loyal-fee” programs and it is not setting well with a growing number of members who feel that they have paid enough into these programs to deserve the rewards of loyalty.

When it comes to flight awards, there is no such thing as a free ticket. In the U.S., frequent flyers can redeem miles on domestic awards for fairly low costs — as low as $5 roundtrip in many cases. The fee most commonly seen on award tickets in the U.S. is the Transportation Security Administration’s September 11 Security Fee of $2.50 per segment, with a maximum charge of $5 per one-way trip. So one way in which a flyer can keep the security fee as low as possible is to search for nonstop flights. Most airlines charge fees to book awards over the phone, and Delta charges a handling fee of $25 for itineraries that include a partner when booking an award over the phone (although the other programs have yet to follow Delta in this latest fee) and American is now charging a new $5 fee on all award tickets, including those booked online.

Despite the new booking fees, the cost of an award flight on a U.S carrier within the U.S. remains relatively low — almost free.

If, however, you are traveling internationally or, in some cases on an international partner of a U.S.-based program, the cost of a “free” flight can increase dramatically. And in some cases, it may actually be cheaper to purchase a flight than redeem miles. The two biggest charges on international award flights include government taxes and fees (usually lumped together for the consumer) and fuel surcharges. We’re all accustomed to the dreaded “taxes and fee” concept, but simply mention “fuel surcharges” and visions of skyrocketing fuel prices will jump into your mind — and you might experience a quickening of the heart beat, a few trembles and perhaps profuse sweating — in other words — fear. Fuel surcharges are arbitrary and a mystery for most consumers and airlines don’t always indicate whether the total cost of an award ticket includes a fuel surcharge, making it difficult for passengers to know why they are being charged hundreds of dollars for a “free” ticket. Sometimes the fuel surcharge is indicated by a Q or YQ tax, both on revenue and award tickets so look for those letters when you’re trying to see who’s footing the bill for the cost of fuel.

Researching Fuel Surcharge Policies

When researching the airlines’ fuel surcharge policies, we called reservations agents to ask whether their airline charged a fuel surcharge for awards on their own and partner flights. Many agents gave us an estimated fuel surcharge so the actual cost may be different than what we mention in this article. And because the price of fuel is continually changing, these fuel surcharges are frequently adjusted. We conducted our research during the first week of June.

Differences in Taxes and Fees

When we compared international award flights on U.S. carriers, we looked at a New York to London itinerary and a Los Angeles to Singapore itinerary. The cost of an award flight to London was between $124 and $141 in coach and between $201 and $219 in first class, depending on the carrier. It turns out a New York to London itinerary costs more than three times as much than a flight from Los Angeles to Singapore, which was between $35 and $40 in coach and first class. The reason? The United Kingdom charges a United Kingdom Air Passengers Duty and Passenger Service Charge, which together range between $100 and $200, depending on class of service. In comparison, the U.S. charges an immigration fee, customs fee and animal and plant health inspection service fee, but these charges are less than $10 each. Each country imposes its own fees and taxes, which the airlines simply pass on to passengers, including travelers flying on award tickets. Taxes and fees can vary widely among carriers, but the biggest fee added to award tickets in many cases is the fuel surcharge, which many international carriers add to the cost of award tickets.

U.S. Airlines

We asked the U.S. carriers whether they currently add a fuel surcharge to award tickets or are planning to in the future. None of the airlines commented on future pricing plans, but Northwest, American, United and US Airways currently do not charge a fuel surcharge on their own flights or partner award flights.

Our contact at Delta informed us that Delta does not include fuel surcharges on award tickets, but they sometimes apply a fee, depending on the origin, destination and operating carrier. This extra fee applies to Delta flights originating in Europe and on partner Air France flights and is comparable to a fuel surcharge in terms of cost. Continental doesn’t collect fuel surcharges on awards flown on Continental or for awards on partner carriers in the U.S., and for the majority of award tickets on flights outside the U.S. However, they said there may be a few exceptions and a fuel surcharge may be included on tickets issued for partner carriers in very limited markets (Japan, Hong Kong and Philippines, for example).

International Airlines

The international airlines’ policies on fuel surcharges can be confusing and we didn’t find many hard and fast rules. Of the airlines that don’t charge a fuel surcharge on awards on their own airline, many don’t charge a fuel surcharge on partners. There are, however, exceptions. SAS does not charge a fuel surcharge on SAS flights but does assess a surcharge on all partner airline flights. While Emirates does not charge a fuel surcharge on their own flights, if a partner airline charges a fuel surcharge, Emirates will include their fuel surcharge on an award flight. LAN does not charge a fuel surcharge on their own or partner flights and Alitalia reportedly charges a fuel tax, which was only $16 on a London to New York flight on partner Continental.

When we researched the cost of award flights on international carriers, the highest price we were quoted was $560 on All Nippon Airways from New York City to Tokyo, and this price is likely to increase since they adjust the fuel surcharge every quarter. The current policy states: “All Nippon Airways adds a fixed fuel surcharge based on the three-month average of the fuel price of Singapore Kerosene that is amended every three months. For each flight segment between Japan and Europe, North America and the Middle East, ANA will charge a $253 fuel surcharge.” Japan Airlines was charging $450 roundtrip for a New York to Tokyo award ticket. In comparison, Cathay Pacific’s $258 seems cheap, although it’s still a lot more than redeeming miles on U.S.-based carriers.

Many airlines that charge a fuel surcharge on their own flights also charge a fuel surcharge on partner flights, regardless of whether the partner assesses a fuel surcharge. For example, if you redeem Aeroplan miles for a United flight from New York to Los Angeles, you’ll have to pay around $200 in taxes and the fuel surcharge. The same flight on United would be only $5 to $10.

However, this general policy isn’t true on all partners or may be limited to specific partner routes. For example, Lufthansa charges a fuel surcharge on partner United award flights from London to JFK but on a United award flight from Denver to Seattle, the charge is the same $10 that United charges Mileage Plus members. Qantas charges a fuel surcharge on its own flights and will charge a fuel surcharge on partner airline awards only if the partner charges a fuel surcharge. Of the airlines that we looked at, those that charge a fuel surcharge on their own and some, if not all, partner flights include Air Canada, Air France/KLM, All Nippon Airways, British Airways, Cathay Pacific, Japan Airlines, Korean Air, Lufthansa, Qantas, Singapore Airlines and Virgin Atlantic.

What Can You Do?

If you are a member of an airline that currently charges a hefty fuel surcharge on award tickets, there’s not much you can do to avoid the charge. You could choose to earn and redeem miles with a partner airline that doesn’t charge a fuel surcharge, but there is the chance that the partner will begin tacking on a fuel surcharge to award tickets in the future. We wouldn’t be surprised to see U.S.-based airlines follow the lead of international airlines and start adding a fuel surcharge.

If you are a Qantas Frequent Flyer or Lufthansa Miles & More member, you can take advantage of those programs’ offers to redeem miles to cover the cost of the total taxes and fees. Frequent Flyer members can redeem 6,000 points to cover the surcharges, fees and taxes on Qantas award flights (within domestic Australia and New Zealand) and for longer distance flights, a roundtrip flight from Sydney to London would cost around 200,000 points (normally 128,000 points) when the roughly $700 in taxes and fees are included. Miles & More members can redeem 10,000 miles to pay for the taxes, fees and fuel surcharge on Lufthansa and Miles & More partner airline flights within Europe. This brings the proposition back to a truly “free” ticket — albeit only when spending more miles.

Of the airlines that charge a fuel surcharge on partner airlines’ award flights, some airlines do not add the fuel surcharge on all of their partners. For example, you can redeem Delta SkyMiles for a nonstop Paris to New York flight on partner Air France for $405.38 in taxes and fees, or you can redeem miles for the same route with Continental (connecting in Houston) for a total price of $81.56. When you are looking for award tickets, investigate other route options to see if you can redeem miles on a partner that doesn’t charge a fuel surcharge. You’re most likely paying extra to book your partner flight through an actual human being over the phone — so don’t be afraid to ask about fuel surcharges on your different award ticket options.

To look on the bright side, we recently read an article in The Wall Street Journal that reported the estimated fuel cost per passenger on transcontinental U.S. flights. The price per passenger just for fuel on American’s 767-200 aircraft from JFK to LAX was $488. Compared to the cost of fuel to fly an airplane, the taxes, fees and fuel surcharges don’t seem too bad, especially in the U.S.

Airline Route Taxes and Fees in coach Fuel surcharge Fuel surcharge on partners
Air Canada New York to Vancouver $200 yes yes
Air France New York to Paris $410.00 yes yes
Alitalia New York to Rome $96.00 no yes*
All Nippon Airways New York to Tokyo $560.00 yes yes
British Airways New York to London $535.00 yes yes
Cathay Pacific New York to Hong Kong $258.00 yes yes
Emirates New York to Dubai $30.00 no Yes, if the partner airline charges a fuel surcharge
Japan Airlines New York to Tokyo $450.00 yes
Korean Air New York to Seoul $260.00 yes Yes, if the partner airline charges a fuel surcharge
Qantas Airways New York to Sydney $300-400 yes Yes, if the partner airline charges a fuel surcharge
LAN New York to Lima $50.00 no
Lufthansa New York to Frankfurt $350.00 yes yes
SAS New York to Stockholm $47.00 no yes
Singapore Airlines New York to Singapore $480.00 Singapore dollars yes
Virgin Atlantic New York to London $379.38 yes yes

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