Just how do "fuel surcharges" get calculated

Discussion in 'General Discussion | Miles/Points' started by jfhscott, Apr 12, 2012.  |  Print Topic

  1. jfhscott
    Original Member

    jfhscott Silver Member

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    I imagine that I am preaching to the choir, but fuel surcharges are pretty bogus.

    I understand that fuel is a major expense for airlines.

    I can even sympathize that some businesses have to share the risk of volatile markets. For example, fishing charters in Alaska often charge a fixed fee plus a variable fee determined by the prevailing price of fuel at the dock the day you go out. Anyone who isn't comfortable with the allocation of risk can stay home.

    But fuel surcharges don't follow that model. Most notably, they have become so routine with certain carriers that they cannot be justified by volatility. Nor have I ever heard of a fuel surcharge being returned to a passenger when the price of fuel has dropped. Indeed, fuel surcharges seem to involve no measure of risk sharing.

    Rather, they just appear to be an arbitrarily determined component of a fare. In a competitive market, they get incorporated into consumer decisions. With frequent flyer programs, not so much, as there is great, often unappreciated, variance with whether a carrier's miles always/sometines/never cover fuel surcharges on their own/partners award seats.

    But I suppose my question is, how do these seemingly arbitrary surcharges get calculated?
  2. KVS Tool

    KVS Tool Z Representative

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    You have answered your own question -- the amounts of carrier-imposed surcharges are not "calculated"; they are are set (and adjusted) by the carrier at their own discretion, just like the Base Fare amounts.
    onlybeef42 and TheTravelAbstract like this.

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