The burning question on my mind today is: why are airlines still levying fuel surcharges when fuel prices are at an all-time low?
Airlines introduced the fuel surcharge to protect themselves from the rising cost of oil when it was trading at over $80 per barrel. Today, oil is at a 12-year low. So why are we still paying a ‘surcharge’ in South Africa?
Airlines have come up with several answers to this question; the most regular being a crippling rate of exchange. They say any reduction in the price of oil would be offset by the fact that operating costs are in dollars.
Their argument unfortunately doesn’t explain why they don’t incorporate these costs in the actual fare instead of levying it as a separate surcharge. Fuel is a cost of doing business for airlines and it should be included in the actual fare so that South African consumers can see up front and in a transparent manner what they are paying towards their airfare.
You may shrug your shoulders and say if the final price of the flight ticket remains unchanged regardless of how it is comprised, it doesn’t really matter whether airlines charge you the extras in the actual fare or in the form of a surcharge.
But, if you’re a frequent flyer card holder, you certainly should care. In most cases, travelers can only use their frequent flyer points to pay for the actual fare, not for any levies or government taxes. So, when airlines categorise a large chunk of the fare as a surcharge, your free loyalty ticket has suddenly become a lot more expensive.
Let’s show you the difference with this simple exercise: If you want to book a Johannesburg-London return reward flight on BA from, let’s say, 08 to 15 May, your free ticket will cost you $461 in economy class and $838 in business class. If the fuel surcharge was incorporated in the base fare, your reward flight would cost you $205 in economy and $311 in business.
There are ways to circumvent the fuel surcharges when booking reward tickets. The simplest way is to select a loyalty programme that doesn’t impose fuel surcharges on award tickets, of which there are few in South Africa.
Otto de Vries
CEO:ASATA
