Air Passengers Face Further 8Pc Rise In Fares

[nicky1982]

Air passengers face further 8pc rise in fares

The chief economist at airline industry body IATA, Brian Pearce, tells Transport Editor David Millward that soaring oil prices and tax rises mean passengers can expect to pay up to eight per cent more for plane tickets by the end of the year. Passengers face fare rises of up to eight per cent because of soaring oil prices and further tax rises, a leading aviation economist has warned. Brian Pearce of the International Air Transport Association said that, despite a fall in demand for leisure travel, the chances of carriers discounting fares is remote.

continued here

http://www.telegraph.co.uk/travel/travelnews/8561270/Air-passengers-face-further-8pc-rise-in-fares.html

Edited June 8, 2011 by sbk
edited for clarity and fair use principles

[bangkokburning]

This is insane. ANA is already asking nearly 50% in tax/fuel surcharges for a ticket I am looking at back to states. B18,500 in fuel tax.

[Sam Drucker]

A fuel surcharge is not a tax; it is determined and imposed by the airline itself. (Admittedly, I think some airlines play some games with these surcharges, how they're determined, what the baseline is for them, etc.) I think your 18,000 baht figure is a combination of fuel surcharges and other taxes and fees also. I'm taking THAI to Los Angeles in a few weeks and their current fuel surcharge on that route is about 12,000 baht or $400 USD (return). Three years ago on THAI, their fuel surcharge on that route peaked at $562 USD (return) (or about 16,860 baht at current exchange rates.)

[NanLaew]

I don't deal with aviation fuels but pretty sure the airlines aren't playing games.

I do deal with MDO (diesel for ships) and there's been at least at least a 25% increase in global fuel costs in the first quarter of 2011 alone. I don't doubt that AVGAS is increasing similarly.

[wileycoyote]

Well this bound to be yet another dent in the Tourism arrivals

[theoldgit]

I don't deal with aviation fuels but pretty sure the airlines aren't playing games.

I agree they are not playing games, they are in business to make a profit, the price of oil is going through the roof, it's not my area of expertise but I suspect this is due to speculators and the unrest in the Middle East.

Airlines have a lot of capital ties up in aircraft and, not unnaturally they want some return on their investment. I think the real bummer are the taxes imposed by various governments, especially the UK, so see airline passengers as a soft target.

I think they days of cheap, or even reasonably priced, long distance air travel is going to be relegated to the history books.

[theoldgit]

I don't deal with aviation fuels but pretty sure the airlines aren't playing games.

I agree they are not playing games, they are in business to make a profit, the price of oil is going through the roof, it's not my area of expertise but I suspect this is due to speculators and the unrest in the Middle East.

Airlines have a lot of capital ties up in aircraft and, not unnaturally they want some return on their investment. I think the real bummer are the taxes imposed by various governments, especially the UK, so see airline passengers as a soft target.

I think they days of cheap, or even reasonably priced, long distance air travel is going to be relegated to the history books.

[theoldgit]

I don't deal with aviation fuels but pretty sure the airlines aren't playing games.

I agree they are not playing games, they are in business to make a profit, the price of oil is going through the roof, it's not my area of expertise but I suspect this is due to speculators and the unrest in the Middle East.

Airlines have a lot of capital ties up in aircraft and, not unnaturally they want some return on their investment. I think the real bummer are the taxes imposed by various governments, especially the UK, so see airline passengers as a soft target.

I think they days of cheap, or even reasonably priced, long distance air travel is going to be relegated to the history books.

[theoldgit]

Well this bound to be yet another dent in the Tourism arrivals

Probably, but it will be worldwide not just Thailand.

[bangkokburning]

Well, you can call it what you wish, the bottom line is all that matters. I am sure they are padding this to make up for lost revenue. I fully realize that flying a person is far different than flying cargo but I seriously doubt it costs US2000 to fly a crate from BKK-IAD. Is cargo now 45% more expensive? DOUBT IT. They can charge what they want I can fly if I want

[lomatopo]

The IATA spokesperson is being a bit disingenuous, as expected from any industry shill.

Many/most airlines control/manage fuel costs by hedging. And they 'raise' total airfare prices by adding YQ (fuel surcharges) fees which are not subject to national sales tax (e.g. 7.5% in the U.S.). YQ fees are also not subject to existing discounting schemes. Airlines have many corporate and government contracts which offer discounts off published fares, buy the discount is not applied to the YQ fee, so more margin, and a way to increase overall fares.

So prices are going up, and according to the IATA shill, "... the chances of carriers discounting fares is remote", because the industry tells us so.

BKK-SFO-BKK on NH (ANA), so the fuel surcharge (YQ) is ~ 33% of the total, but equal to 60% of the base fare.

Fare 1: Carrier NH SHX3M BKK to SFO (rules)

Passenger type ADT, round trip fare, booking code S

Covers BKK-NRT (Coach), NRT-SFO (Coach)

17,000.00

Fare 2: Carrier NH SHX3M SFO to BKK (rules)

Passenger type ADT, round trip fare, booking code S

Covers SFO-NRT (Coach), NRT-BKK (Coach)

17,000.00

NH YQ surcharge (YQ) 400.00

USDA APHIS Fee (XA) 155.00

US Immigration Fee (XY) 215.00

US Customs Fee (YC) 170.00

Japan International Passenger Facility Charge (SW) 780.00

Passenger Security Service Charge (OI) 390.00

US International Arrival Tax (US) 500.00

NH YQ surcharge (YQ) 17,510.00

Thailand Passenger Service Charge (TS) 700.00

US International Departure Tax (US) 500.00

US September 11th Security Fee (AY) 80.00

US Passenger Facility Charge (XF) 140.00

Subtotal per passenger 55,540.00

Number of passengers x1

TOTAL AIRFARE & TAXES 55,540.00

[Sam Drucker]

I don't deal with aviation fuels but pretty sure the airlines aren't playing games.

I do deal with MDO (diesel for ships) and there's been at least at least a 25% increase in global fuel costs in the first quarter of 2011 alone. I don't doubt that AVGAS is increasing similarly.

I don't dispute that the price of oil is up, and that it affects the cost of doing business for the airlines. What I have a problem with is the lack of accountability and transparency in how these surcharges are determined, presented, and implemented. If they're not playing games with fuel surcharges, kindly explain why:

• After the price of oil crashed in late 2008 (it got down below $40/barrel for a while) fuel surcharges (though reduced) remained?
  
• When purchasing most airline tickets, fuel surcharges are categorized as "taxes", conveniently misleading the public into believing they are the government's doing, not the airlines themselves.
  
• What price of oil are they based on? What price does oil have to reach to initiate them? What price must it fall to for surcharges to be dropped?
  

[RHCP]

I don't deal with aviation fuels but pretty sure the airlines aren't playing games.

I do deal with MDO (diesel for ships) and there's been at least at least a 25% increase in global fuel costs in the first quarter of 2011 alone. I don't doubt that AVGAS is increasing similarly.

I don't dispute that the price of oil is up, and that it affects the cost of doing business for the airlines. What I have a problem with is the lack of accountability and transparency in how these surcharges are determined, presented, and implemented. If they're not playing games with fuel surcharges, kindly explain why:

• After the price of oil crashed in late 2008 (it got down below $40/barrel for a while) fuel surcharges (though reduced) remained?
  
• When purchasing most airline tickets, fuel surcharges are categorized as "taxes", conveniently misleading the public into believing they are the government's doing, not the airlines themselves.
  
• What price of oil are they based on? What price does oil have to reach to initiate them? What price must it fall to for surcharges to be dropped?
  

Good point above as highlighted.

Using this approach of airlines to separate and add fuel surcharges, how come other types of industry don’t do the same when oil is a heavy component of their costs? I can’t help thinking that it is an easier way for airlines to justify added fuel surcharges than incorporating the costs into their prices.

[martin81]

The so called Fuel surcharges has some advantages for the airlines compared to just raising fares.

1. no child discount on fuel surcharge.

2. Some airlines (TG and others) even impose them on so called "free" bonus tickets which makes a "free" ticket rather expensive.

Above are IMHO some of the reasons for fuel surcharges.