QF Fuel Surcharges... May go down when fuel below $60/barrel for a month

[ozstamps]

Oil is $60 a barrel today and heading south, so let's see if they keep their word. :idea:

 

[NM]

Oil is $60 a barrel today and heading south, so let's see if they keep their word. :idea:

lets hope it remains Mexican for a month. Just one pop above the threshold and they will exercise their excuse :evil: .

 

[Altair]

Oil is $60 a barrel today and heading south, so let's see if they keep their word. :idea:

Which price are you looking at?
Brent is down but West Texas is above....there are lots of different oil prices around we would need to know which price or market Qantas monitors. I thought I read it was Singapore....
Oh in case people wondered about how much it costs to produce a barrel of oil. Saudi Arabia is around $5 USD but Brent is over $30 (old figures).

 

[ozstamps]

Which price are you looking at?

Brent is down but West Texas is above....there are lots of different oil prices around we would need to know which price or market Qantas monitors.

Take your pick.

Bloomberg.com: Energy Prices

 

[serfty]

... It would be a lot clearer if they renamed the "fuel surcharge" tax to "balance sheet adjustment surcharge" with a code of BS instead of YQ.

ROFLMAO!!!

 

[thadocta]

Nor do I. But when the costs are reducing there should be an equal treatment, not just the cabbies benefitting from it.

Ummm, let's see - how often do public transport fares go up? About once a year. So, the fares for public transport (train/bus/ferry/taxi) were set a year or so ago, and since then, fuel costs have sky-rocketted. Fares have not risen to compensate for this, but have been absorbed by the operator.

Now that fares have risen to reflect the increased fuel costs, and fuel costs are going down, are you suggesting that fares should go down at the same time? If so, I am hoping you would agree to fares going up on a daily basis to reflect fuel price increases. If not, I am hoping you would agree that the current gains made by transport operators will cancel out the losses they made over the last year when prices went through the roof.

Dave

 

[thadocta]

Was the increase based on the peak cost-base or was it to a point part way between the original cost and the peak?

In Australia, most cabs do not use petrol, but run on LPG. The LPG price has not been as volatile as the petrol price over the last year. I have not been monitoring the LPG prices recently. Have the peaked and now dropped as well?

Seeking input from our undercover cab industry representative

Okay, looking at what my drivers are telling me (and looking at their figures).......

(Background - as a general rule of thumb, you need 2 litres of LPG to do what 1 litre or petrol will do. So, if petrol is more than double the price of LPG - on a per litre basis, then LPG is cheaper to run. If petrol is less than double the price of LPG - on a per litre basis - then petrol is cheaper to run. This will depend a lot on the type of running you are doing, whether it be city vs highway cycle, how well the vehicle is maintained, and so on).

In NSW, the price of LPG has been in the 50-60cpl range now for well over a year, it hasn't fluctuated much. Petrol has, in the meantime, been all over the place. So using the price of petrol at the pump when determining the value of taxi fares is meaningless.

You also need to factor into all of this the cost of actually running a taxi. A green slip (CTP insurance, for those outside of NSW) is typically around the $3500 mark (so stop whinging the next time yours comes in at over $400). WorkCover insurance also comes in at several thousand dollars per annum, and then there is the cost of maintenance (remember, these cars do more km's in a week than some cars do in a year - and they need to be maintained, and inspected every four months).

Lastly, there is the issue of increasing the incomes of drivers. Cost of living goes up all the time, so driver incomes need to go up as well. The only way that driver incomes will go up (taking into account that other costs will be going up as well) is if fares go up.

So whilst fuel prices may have been a small factor in the recent fare increases, there are a stack of other issues to be considered as well.

(NM - can I go back undercover now?)

Dave

 

[Kiwi Flyer]

Ummm, let's see - how often do public transport fares go up? About once a year. So, the fares for public transport (train/bus/ferry/taxi) were set a year or so ago, and since then, fuel costs have sky-rocketted. Fares have not risen to compensate for this, but have been absorbed by the operator.

Now that fares have risen to reflect the increased fuel costs, and fuel costs are going down, are you suggesting that fares should go down at the same time? If so, I am hoping you would agree to fares going up on a daily basis to reflect fuel price increases. If not, I am hoping you would agree that the current gains made by transport operators will cancel out the losses they made over the last year when prices went through the roof.

Dave

Nah mate, I'm talking about in NZ. AFAIK cab fares can change any time (they certainly do change more often than once a year) and most recently rose a few months ago. The increase in cab fares was touted as being due to rising petrol prices. Since then petrol prices have fallen to the lowest they've been in a long time.

Here, buses are different since they are heavily subsidised the fares have to be approved. I'm not sure whether they can only change once a year, or if they can change at any time but with approval of body that provides the funding.

Also here most cabs run on petrol. Very few if any run on LPG or diesel.

It sounds like the set up is different in Australia. Apologies for the confusion.

 

[NM]

(NM - can I go back undercover now?)

Thanks for the insight. I was not aware it was a 2:1 typical consumption for LPG vs Petrol. I thought the benefit was more in favour of LPG than that, but have no experience with using LPG for anything more than cooking steaks, snags and mushies on the BBQ (and no experience with using petrol on the BBQ :shock: ).

 

[serfty]

... (Background - as a general rule of thumb, you need 2 litres of LPG to do what 1 litre or petrol will do. So, if petrol is more than double the price of LPG - on a per litre basis, then LPG is cheaper to run. If petrol is less than double the price of LPG - on a per litre basis - then petrol is cheaper to run. This will depend a lot on the type of running you are doing, whether it be city vs highway cycle, how well the vehicle is maintained, and so on). ...

From what I know, it's not 2:1, its more like 5:4 or to put it another way LPG is ~20% less efficient than ULP. Maybe taxis are different because they tend to have different driving pattern than private vehicles; things such as a lot more short trips, frequent accelleration and deceleration and spending a far greater time idling.

More here: Special report: Critical LPG questions answered - Motoring - CARSguide

And Here: LPG vehicle trial - ANUgreen - ANU

 

[Mal]

Go sic 'em Costello:
Airlines told to drop fares | The Sunday Mail

"AIRLINES that increased ticket prices to cope with skyrocketing international oil prices must now drop fares in line with falling oil prices, Treasurer Peter Costello says.
Qantas last month imposed further fuel surcharges on its international flights.
<snip>
"And I wouldn't expect airlines to hold temporary surcharges, which were put in place in relation to temporary conditions, to hold those surcharges once those conditions have passed."

 

[ozstamps]

http://www.news.com.au/sundaymail/story/0,23739,20467860-29277,00.html

'AIRLINES that increased ticket prices to cope with skyrocketing international oil prices must now drop fares in line with falling oil prices', Treasurer Peter Costello says.

One of the smarter things ever to leave his lips.

Wish he would force them ALL just to imbed all fees and surcharges into one nett price so we could compare more readly.

Can never understand why ACCC has not done this years back. :evil:

 

[Kiwi Flyer]

The US DOT seems to have backed down on allowing surcharges to be shown separately (which was their preferred option) - status quo remains ie fares must be all inclusive.

 

[ozstamps]

Rob - maybe for US ads.

United here for instance NEVER include the insane fees in their ad prices.

I booked a simple US ticket on UA for a few weeks time and taxes and fees per person were over $A450 each. :evil:

================

Brent spot is under $US60 as I type this - FWIW

Bloomberg.com: Energy Prices

 

[Kiwi Flyer]

maybe for US ads.

United here for instance NEVER include the insane fees in their ad prices.

I booked a simple US ticket on UA for a few weeks time and taxes and fees per person were over $A450 each. :evil:

Yup US DOT rules apply ex-USA only. Just like NZ commerce commission rules only apply ex-NZ and Australia ACCC only apply ex-Oz.

The treatment I find amazing is QF within NZ. Since late last year when NZ lost a court case they have advertised inclusive prices for domestic trips but NOT for international trips ex-NZ. Figure that logic! And for the domestic ones when you get the e-ticket it breaks down base fare and taxes (includes real taxes as well as surcharge) which everyone knows almost all domestic taxes are fuel surcharge.

 

[Mal]

Go sic 'em Costello:
Airlines told to drop fares | The Sunday Mail

And of course Qantas is quick to tell everyone why they can't reduce their surcharges:

Airlines reject call to drop fares | NEWS.com.au

Qantas chief financial officer Peter Gregg today said there were no plans to cut those charges.

"While the spot price may have fallen briefly, fuel prices remain volatile," he said.

"On top of the crude oil situation, jet fuel refining margins have increased significantly and are currently 30 per cent above their 2005/06 averages.

"Even after hedging and surcharges we still face a significant shortfall in terms of recovering fuel cost increases."

Mr Gregg also said the forward cost of hedging - which provided airlines with some protection against unexpected price rises - was at a premium and without hedging the surcharge would need to be even higher.

"We would need to see a sustained reduction in fuel prices before we could even consider reducing our fuel surcharges," he said.

Note of course no $ amount that fuel would have to drop to is being bandied around this time. I wonder why?

 

[Dave Noble]

I cannot see how an increase in refining costs justifies a surcharge based on cost of the fuel itself. If its processing costs have increased, then that might be an excuse to raise fares if they felt it necessary

Dave

 

[Yada Yada]

you're correct we are enjoying some good times at the moment. I am involved in the mining industry so i am doing very well at the moment.

i reckon the average australian is pretty easy to convince during these good times. the last election was won on the basis that the government stated they could control interest rates ... the electorate basically believed them. even a basic understanding of the australian economy would be that we have a central bank that controls interest rates - not a government that does. Our government has no fiscal control, they gave it up years ago under Keating.

if we look at some of the projects that the mining/resource industry are wanting to get underway and can't at the moment because of costs spiralling upwards something has got to give eventually ...

Just interrupting this thread for a brief economics discussion...

The govt still has plenty of fiscal control. What they did some years back was hand over the main lever of monetary policy - interest rate control.

Fiscal policy involves the collection of tax and spending of it.

The govt still does have some monetary policy levers, but being loyal monetarists they are unlikely to use them. They are more likely to try to influence the Reserve Bank on the setting of interest rates.

Sorry... I wasn't trying to be a smarty pants. I just wanted to finally use something I was taught at university many moons ago!

Aside from that, I agree wholeheartedly with your post. I'm not so sure that the economy is going so well. Certainly in NSW things are not great, and my guess is that by the time the govt and RBA have seen the next few quarters of CPI increases and can't blame bananas and weather, the inflation train will be well under way and difficult to stop.

Now returning to normal thread discussion topic...

I was one person complaining about the airlines not rolling these added costs into the price of a normal ticket. But if they had done that, I reckon the prices may never have gone down when fuel costs went down. At least with the way it is being charged at present, we can agitate for its reduction or removal and will know when that has happened.

 

[JohnK]

And of course Qantas is quick to tell everyone why they can't reduce their surcharges:

And there is a sane person that believes this story?

 

[oz_mark]

And there is a sane person that believes this story?

Qantas obviously thinks many people will believe this