Why Airlines Love Fuel Surcharges YQ’s/YR’s?

The fuel surcharges have found their way into the fares in the past 10 years. Airlines are trying to justify this by the increase in jet fuel price, and for the ease of changing fares by adjusting fuel surcharges alone.

But in reality these fuel surcharges are nothing more than an eloquent “scam”, if I may use that rather strong word. Jet fuel is cost of doing business for the airlines as are the wages of employees and plane leases.

Here are five reasons why airlines love these fees:

1.  Airlines discount business and first class tickets heavily for corporate clients. The discount only applies to the base fare.

2. Airlines pay travel agent commissions based on the base fare without fuel surcharges.

3. Sometimes airlines can advertise cheaper fares hiding the fuel surcharges to taxes/fees component.

4. Most of the non-US airlines charge fuel surcharges on award tickets.

5. Possible tax advantage. Some countries tax airline ticket purchases. Taxes may not apply to fuel surcharges.

Fuel Surcharges on award tickets?

Most of the US based airlines don’t charge fuel surcharges on award tickets, Delta is the biggest exception and American Airlines when British Airways flights are involved. The situation is different elsewhere though. Travelers need to pony up significant amount of money to pay for fuel surcharges that make redeeming miles for economy travel very bad proposition.

The other day, I made rather complicated award using Continental miles that would have been expensive had they collected fuel surcharges as well.

Here is the breakdown how much the YQ’s/YQ’s would have been:

Lufthansa business class HEL-MUC 39 EUR = $51

Lufthansa business class MUC-LHR EUR = $51

Virgin Atlantic business class LHR-NRT 150 GBP = $236

ANA business class NRT-PVG 4800 YEN = $63

Thai Airways business class PVG-BKK 521 CNY = $83

Thai Airways business class BKK-AKL 5350 THB = $173

Air New Zealand business class AKL-NAN 6 NZD = $5

Carrier specific fuel surcharges would have been total of $662 for this routing. Because Continental doesn’t charge these, I only paid the REAL taxes of $120.10.

As you can see from the example above the fuel surcharges that Air New Zealand charges are very low compared to other airlines. If you are redeeming from a program that charges fuel surcharges, you can save significant amount of money by routing your trip on carriers like NZ that doesn’t participate to this dodgy practice.