Three Airlines Remove Fuel Surcharge From Tickets

Three airlines have removed the fuel surcharge from their airfare ticket prices as oil costs continue to drop.

But don’t plan on using the savings to spring for the filet mignon on your next trip. There are none.

Virgin Australia, Qantas and AirAsia all dropped the fuel surcharge on international flights, but instead of showing up as big savings in the price of a ticket – Virgin, for instance, says the move will save $40 on the Australian dollar, or $32 in U.S. currency – the airlines are rolling the costs into full fares, according to Time Magazine and Business Insider Australia.

“These reductions reflect the benefits of the decline in global oil prices along with the negative impact of the depreciating Australian dollar,” Virgin said in a statement.

Qantas told Business Insider: “While global fuel prices have fallen in recent months, international air fares are extremely competitive and are significantly lower than when surcharges were first introduced 10 years ago.”

No other airlines have followed suit, and don’t expect them to. On Tuesday, in a call with analysts and reports to announce its fourth-quarter and full-year earnings, American Airlines Chief Financial Officer Derek Kerr said the company is taking a cautious approach when it comes to the volatility of fuel prices and is treating the situation as if the cost of a barrel of oil is still $100.

American CEO Doug Parker said that “when demand drops you will see pricing move accordingly.”

All of which has outraged consumer groups like Travelers United and FlyersRights.org, both of which this week jointly sent a letter to airline CEOs about the matter.

"Dear Airline CEO:

We are writing to ask why you have not lowered your airfares in light of the 50% reduction in jet fuel prices since June, 2014.

When prices increased after 2009, airlines were quick to raise prices or add fuel surcharges, noting that fuel was the No. 1 airline expense. But now that fuel prices have dramatically declined, airlines are not reducing prices but instead increasing them and reducing flights. …

Gasoline pump prices have declined so much that many Americans will reconsider driving instead of flying. As you know, corporate jets companies have effectively reduced pricing and increased their convenience. They have been growing rapidly, taking many first class and business class passengers away from airlines.

The major argument for airline deregulation was that competition would lower prices and provide more flight convenience. Instead we are seeing extremely high airline profits coupled with cartel-like behavior as well as poor reliability and increased travel times. …

We therefore urge you to immediately order air fare reductions. This would set an example of responsible corporate behavior and show that price competition in the airline industry is not dead.”