UK Ferry Tickets

What goes up generally goes down. So why is that not the case with fuel surcharges?

Despite oil prices hitting a 15-month low, British Airways, which charges £70 per person on long-haul flights, and other airlines have so far refused to cut their fees. A barrel of oil is now around $60 and the last time the cost was that low, the fuel surcharge was £48.

BA has openly admitted it will benefit to the tune of £100 million from falling oil prices, but adds that it will adjust the surcharge as and when it feels necessary.

The UK’s Office of Fair Trading and the US Department of Justice are currently carrying out a probe into alleged price fixing of fuel surcharges. BA’s commercial director Martin George and head of communications Iain Burns have been suspended since June and have now resigned.

The investigation centres on whether any airlines have colluded in the setting of charges. While it would obviously be anti-competitive for any carriers to do that, many people also feel the governments should be looking at the level of surcharge, why it has gone up much quicker than it has fallen, and whether we should have them at all.

BA has increased the charge six times in the past two years, each time arguing that was in response to a rise in fuel costs.

That may well be the case, but travellers are right to question why airlines don’t drop their charges so quickly.

Some carriers claim they are waiting for greater stability or that they have already paid in advance for fuel. But those arguments don’t seem to apply when the fuel price is rising.

A bigger issue, which we have already debated in this newsletter, is whether surcharges should exist at all. Why not just have an all-inclusive fare, which rises when any costs, including fuel, go up?

Guest Article by

Jeremy Skidmore

Tuesday, January 31st, 2006