Airlines aren’t planning to cut fuel surcharges
Oil, jet fuel prices have slipped in the past month
By Tom Stundza -- Purchasing, 9/10/2008 5:45:00 PM
U.S. airlines have no immediate plans to reduce domestic-fare fuel surcharges of up to $170 per round trip that are added to ticket prices even though oil prices have declined.
The Associated Press reports that fuel accounts for up to 40% of the budget at many of the biggest airlines, topping labor as their biggest single cost. U.S. airlines increased their fuel surcharges several times as oil roared past $100/barrel and beyond, but they haven't reduced the fees since the oil prices have slipped 30% since their mid-July peak.
U.S. carriers, which other than Southwest all lost money in the first half of this year, told the news service Tuesday that it's too early to eliminate the surcharges. A spokeswoman for Northwest Airlines says “fuel prices are still well above what we budgeted for the year,” A spokesman for American Airlines, the nation's largest carrier, says fuel prices “remain very volatile despite short-term trends.”
A review of Energy Information Administration (EIA) data shows that the spot price for New York jet fuel has dropped 24% to $3.28/gallon yesterday from $4.33 in late June.
Airlines closely watch the fares and fees that competitors charge because they don't like to be priced higher. So, when one air carrier increases fares or fees, the others often go along. “We always try to keep our surcharges competitive with the industry, so we'll monitor what those prices are,” a spokeswoman for United Airlines tells the Associated Press. That suggests surcharges could fall in a hurry if one of the six so-called legacy airlines steps forward.
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