The Business Travel Coalition recently wrote to the Department of Transportation, urging them to investigate what the BTC describes as violations of DoT regulations to do with the imposition of fuel surcharges.
It transpires the DoT issued a guidance note in December 2012 that required the airlines to set fuel surcharges that had some basis in reality not fiction, and which must be calculated from a base ‘original’ cost of fuel.
The BTC points out that no matter whether historically accurate or not in the past, the fact that fuel surcharges have not been lowered when fuel costs have halved would seem clear proof that the fuel surcharges now are a sham and in violation of the DoT’s guidance.
Their letter cites a typical trans-Atlantic roundtrip airfare between London and New York currently on offer this month, where the fuel surcharge was set at $458 (compared to a base fare of $403). Let’s look at the fairness of that for a moment.
A Worked Example
A roundtrip flight NYC-LON-NYC involves about 7,000 flying miles. Modern jets give 70 – 85 passenger miles per gallon, meaning an airline would burn 80 – 100 gallons of jetfuel per passenger, roundtrip. Looking at the airlines’ own figures, and using prices as of 13 Feb 2015, jet fuel costs $1.86 a gallon in Europe and the US. So the total cost, not the ‘extra’ surcharged cost, of fuel per passenger roundtrip is in the order of $150 – $185.
Yet the airline is claiming a surcharge of $458 for fuel when its total cost is less than half that.
Do you think the BTC could be on to something here? Is it possible that the airlines are being dishonest and naughty? Okay, so these are two easy questions.
Now for the hard question – what will the DoT do about it? We’re unaware of any response yet received from the Dot, ten days after the BTC’s letter.