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

[Dave Noble]

I was browsing the BA sites looking for the fuel fine details and on the Japan site I saw something that shows that , from Japan at least, there is a defined fuel fine reduction strategy for BA

British Airways will request government approval of the reduction of the fuel surcharge once the price of Singapore
Kerosene falls below the benchmarks for consecutive 30days period.  Please refer to below chart for the
benchmarks of fuel price per barrel at Singapore Kerosene and the reduced fuel surcharges.  If the fuel price of
Singapore Kerosene falls below the benchmark of USD40.00 per barrel for consecutive 30days, British Aiways will
cancel applying the fuel surcharge completely.

Benchmark fuel price per barrel at Singapore Kerosene   Reduced fuel surcharge*  
 
 USD65.00   JPY7500  
 
 USD60.00   JPY6300  
 
 USD56.00   JPY4600  
 
 USD50.00   JPY2900  
 
 USD45.00   JPY1200  
 
 USD40.00   -  
* The surcharge will be reduced if the fuel price falls below the benchmark price in the left hand column for
consecutive 30 days.

The security charge for Tokyo-London route is now reduced and set to JPY300 per sector, that of for shortfall within
Europe remains at USD4.00.

 

[Mal]

Handy link, Thanks Dave. I wish Qantas would be open and produce a similar table (as per Lan and a few other airlines). Perhaps we should try and get the wonderful government to force Qantas to produce one...

I make the current SIN Jet Fuel price to be ~$54.75/Barrel at the moment. The average for October was ~$54.60 or so but it has fluctuated up and down a little.

Will be interesting to see when/if further decreases occur. The cynic in me says that it won't be until early Feb... but who really knows!

 

[oz_mark]

So how are oil prices going. From what I can see they have trended down a bit of late...

 

[serfty]

So how are oil prices going. From what I can see they have trended down a bit of late...

1/2/2007  61.05
1/3/2007  58.32
1/4/2007  57.35
1/5/2007  56.31
1/8/2007  55.55

 

[oz_mark]

1/2/2007  61.05
1/3/2007  58.32
1/4/2007  57.35
1/5/2007  56.31
1/8/2007  55.55

It's all in the right direction. Hopefully they can stay down for a month

 

[JohnK]

It's all in the right direction. Hopefully they can stay down for a month

With the takeover bid high on the agenda don't expect too much Mark.

Oil prices have dropped 30% since July and 9% this year alone. Since August we have had less than 5% correction!

 

[Mal]

Looks like we'll all be waiting a bit longer..

Cheaper oil to lift Qantas profit - Business - Business - smh.com.au

Cheaper oil to lift Qantas profit
Scott Rochfort
January 11, 2007

LOWER fuel prices could put Qantas on track to beat its record net profit of $914 million - but the carrier has warned that oil prices will need to fall further before it considers another cut to its fuel surcharges.

The airline insisted yesterday its fuel levies were not enough to recoup the extra fuel costs it had incurred over the past three years.

"Even after hedging and surcharges we still face a significant shortfall in recovering fuel cost increases," Qantas chief financial officer Peter Gregg said.

"We are closely monitoring the situation but still need to see a sustained reduction in oil and fuel prices before we can consider further reducing our fuel surcharges," Mr Gregg said.

However, the airline failed to disclose the prices oil and aviation fuel would need to reach before it reduced its surcharge.

 

[SeatBackForward]

Imagine if you jumped into a Taxi, and the driver asked for ana dditional surcharge per km travelled as a fuel levy!

FUEL IS AN OPERATIONAL COST of doing business, not a Levy or a Tax.

 

[dajop]

Imagine if you jumped into a Taxi, and the driver asked for ana dditional surcharge per km travelled as a fuel levy!

FUEL IS AN OPERATIONAL COST of doing business, not a Levy or a Tax.

Hmm sense of deja vu, this argument been trotted out many times (which, btw I do agree with).

BUT to counter ... airline fuel surcharges have nought to do with the cost of doing business. If someones paying for a regular "off the shelf" fare then the fare is adjusted appropriately when surcharge is introduced/ increased/ decreased according to supply/demand.

Instead airline fuel surcharges are a neat way of adding revenue from relatively inelastic market segments, those travelling on "free" fares (FF awards), those on circle/RTW fares, and also those getting substantial corporate discounts based on volume of travel (the discount not applying to the surcharges). At same time further cuts commission on to TA's. From a business perspective, pretty neat trick really.

 

[oz_mark]

Looks like we'll all be waiting a bit longer..

Cheaper oil to lift Qantas profit - Business - Business - smh.com.au

Oh well. Better not hold my breath waiting for it to happen then.

 

[Mal]

Oh well. Better not hold my breath waiting for it to happen then.

Yah I know!! I've been holding off purchasing a multi-leg ticket due to uncertainty over the fuel surcharge ... looks like I actually have to suck in the extra fuel fines and get it ticketed!

Oh well. I do also wonder if Qantas is now trying to make up for their original fuel losses by maintaining the surcharge. Wouldn't be the first time a surcharge has been kept around much longer than needed.

 

[JohnK]

The airline insisted yesterday its fuel levies were not enough to recoup the extra fuel costs it had incurred over the past three years.

I would love to know how many salary increases or bonuses Geoff Dixon has received in the last 3 years!

 

[crazydave98]

BA cuts fuel surcharge as oil prices fall

British Airways (BA) is to reduce its fuel surcharge on a number of long-haul routes from tomorrow, the first cut by the Oneworld carrier since it introduced the fee in May 2004.

The reduction reflects falls in the price of oil and will see the current £35 ($68) charge per sector, on all UK-departing long-haul flights under nine hours, cut to £30 per sector. The higher fuel surcharge will still apply on longer flights, owing to greater consumption on these services.

BA’s £8 fuel surcharge will remain unchanged on its short-haul flights. Commercial director Robert Boyle says: “The cost of oil has reduced in recent weeks and therefore we believe that it is right that our customers benefit from lower prices on shorter flights.

“Reducing the fuel surcharge on some of our long-haul flights means that the amount customers pay better reflects the cost of fuel to BA for their specific flight.”

Airlines have steadily increased the level of fuel surcharges after oil prices escalated to record highs. But the price of oil has fallen sharply since last August and a further fall already this year has seen the price of Brent Crude drop to its lowest level for 19 months, at just under $54 per barrel.

Source: Air Transport Intelligence news

 

[oz_mark]

No break for the Canadians.

The Calgary Sun - Airline steadfast on fuel surcharge as oil price slides downward

MONTREAL -- Airline passengers won't likely get a break on fuel surcharges any time soon despite the falling price of fuel.

Companies that locked into hedging contracts when prices were higher remain reluctant to lower prices unless forced to by competition.
Even though 74% of its fuel purchases aren't hedged, Air Canada won't reduce its surcharges because fuel costs remain at historically high levels, says a company spokeswoman.

 

[QF WP]

I would love to know how many salary increases or bonuses Geoff Dixon has recieved in the last 3 years!

Here's the link to the Annual Reports for you to research your information

 

[straitman]

QANTAS is resisting pressure to reduce its hefty fuel surcharge on airfares despite a sharp fall in global oil prices and stronger earnings.

Cheaper fuel lifts airline | NEWS.com.au Business

It's hard to dispute their logic. :evil:

 

[Kiwi Flyer]

QANTAS is resisting pressure to reduce its hefty fuel surcharge on airfares despite a sharp fall in global oil prices and stronger earnings.

Cheaper fuel lifts airline | NEWS.com.au Business

It's hard to dispute their logic. :evil:

"I would imagine public perception would be positive if they were seen to be removing the surcharge but if I was the guy doing the modelling for Qantas I'd be saying, 'Don't take off the fuel surcharge, you're only going to have to put it back on'," he said.

What logic? Since most costs go up in the long run, at least in nominal terms, you imply loading in for normal future costs is reasonable.

The smart thing for QF to do would be to remove the fuel surcharges altogether and incorporate into base fares. They could then hide real increases in that move at the same time as appearing to respond to the public.

 

[straitman]

What logic? Since most costs go up in the long run, at least in nominal terms, you imply loading in for normal future costs is reasonable.

The smart thing for QF to do would be to remove the fuel surcharges altogether and incorporate into base fares. They could then hide real increases in that move at the same time as appearing to respond to the public.

That works for you and I, however the average punter doesn't understand these things and only looks at the bottomline ticket price and then accepts the add on fuel fines.

.... I'm really struggling here when I find myself arguing the pros of the fuel fines. I guess I say this from a business sense only and not from the perspectiveof a customer/passenger.

 

[Kiwi Flyer]

That works for you and I, however the average punter doesn't understand these things and only looks at the bottomline ticket price and then accepts the add on fuel fines.

.... I'm really struggling here when I find myself arguing the pros of the fuel fines. I guess I say this from a business sense only and not from the perspectiveof a customer/passenger.

current 400 + 50 surcharge = 450
with fuel surcharge incorporated 445

never mind the fuel price has dropped enough to warrant say 20 reduction, QF looks good for lowering price 5 but compared to other airlines with surcharge reduction they would be better off

from QF perspective, fuel fines
= less commission to travel agents
= significant revenue on award bookings
= can say base fares are reducing, lowest in x years etc without being right
= more revenue on multi-sector bookings (ie a disincentive for customers to choose routing that isnt the most direct)

 

[oz_mark]

Interesting the comments about not needing to stimulate demand.

More intriguing for me is the fact the local petrol prices have risen over the past few weeks.