View Full Version : BA fined $250,000 for breaching fare rules.
Report here. (http://www.travelweekly.co.uk/Articles/2012/10/03/41804/ba+incurs+us+fine+for+breaching+fare+rules.html?)
About time somebody cracked down on 'free tickets' that costs hundreds of pounds.
Also interesting to note the US DOT's take on liability for "certain fragile or valuable items such as money, jewellery, electronic devices or silverware" in checked luggage. Apparently MC99 doesn't allow them to avoid liability if these are lost or stolen.
No doubt they will have to change their practices and their conditions of carriage, but will it only be in the US?
Will they learn their lesson, or will they continue to lie to their customers?
Edited to add. The DOT order can be found here (http://www.regulations.gov/#!documentDetail;D=DOT-OST-2012-0002-0045). Click on the "view attachment" pdf button to the lower right.
Footnote 11 of said documents appears to ban the addition of 'fuel surcharges' unless "the amount quoted is an accurate reflection of the relevant cost component, such as the added cost of fuel over some baseline". Since BA applies the same fuel surcharge for all transatlantic journeys this appears to prohibit them from adding these to a 'free' frequent flyer ticket.
I wonder if this is retroactive, they own me a few thousands!
Tableview
3rd Oct 2012, 17:11
The scam of so-called fuel surcharges deserves wider publicity. They are, and should be shown as, an integral part of the fare. What happens is that carrier publishes a base fare of, in this case, GBP 198.00, to which is added a 'fuel surcharge' of GBP 239.00.
The other taxes shown are government/authority imposed. It brings a published fare of £198 up to £572.19.
This example is a BA LON-SFO return. I am not singling out BA as being worse than any other carriers, but BA is the topic of this thread.
Fare f gbp 198.00
tx001 x gbp 239.00yqac tx002 x gbp 65.00gbad tx003 x gbp 34.49ubas
tx004 x gbp 3.40ycae tx005 x gbp 10.30usap tx006 x gbp 10.30usas
tx007 x gbp 3.10xaco tx008 x gbp 4.30xycr tx009 x gbp 1.50ayse
tx010 x gbp 2.80xf
total gbp 572.19
grand total gbp 572.19
CelticRambler
3rd Oct 2012, 18:32
Ryanair doesn't add fuel surcharges! :ok: But will MO'L be able to rub BA's nose in it ...?
Tableview. The fine was for 'free' frequent flyer tickets to which they added a fuel surcharge. While BA says they never said 'free' the DOT's interpretation is that BA's surcharge (a flat charge regardless of actual sector distance and not related to the actual cost of fuel) is not the type of charge that can be added.
On revenue tickets their fuel surcharge is not hidden and the DOT ruling doesn't apply to revenue tickets. Had they advertised £198 plus tax and charges they would be deceptive, but I don't think they do. I think their advertised price includes all taxes/charges/surcharges.
Note the DOT no longer has authority over airline pricing (in deregulated markets), they cannot disapprove a fare offering. Here they are acting on their authority over the marketing and sales (i.e deceptive advertising) and not on the price itself.
As an aside one of the main reasons airlines use fuel surcharges is the cost of changing their prices in their system and in GDS/CRSs. Changing a single fare costs about 1/4 of 1 US cent each. Multiply this by the millions of fares each airline has this begins to become a significant cost element, particularly when oil prices are changing quickly. (To change 10 million fares would cost $25,000) To change a surcharge costs them almost nothing. Not saying this is the only reason, or if the airlines are wise to do it this way.
Tableview
5th Oct 2012, 07:33
ExXB : I know that in this case it applied to 'free' tickets but the principle is the same in respect of normal tickets too although to a lesser extent.
In a GDS display, only the base fare is shown, and the taxes and surcharges are not added until the PNR is priced, at which point there is a dramatic difference between the fare that the agent may have quoted and the final cost.
A local radio station and magazine near where I lived used to advertise flights for XXX 'inclusive of all government taxes and charges'. I knew this figure was wrong so rang the local office and was given a far higher quote, which when I queried it, I was told that the advertised price did not include the 'fuel surcharge.' Bloody sneaky. Needless to say that airline remains on my no-fly list.
As for changing fuel surcharge levels costing less than fare levels, I'm not sure why that would be the case since I would have thought the processing would be more or less the same.
One reason that the airlines starting imposing fuel surcharges as opposed to increasing base fares was that they were not commissionable to travel agents whilst the base fare was. Since very few airlines now pay travel agency commissions, and for those that do it's mostly 1 or 2%, this reasoning seems redundant.
This whole area is something that needs to be cleaned up.
ExXB As for changing fuel surcharge levels costing less than fare levels, I'm not sure why that would be the case since I would have thought the processing would be more or less the same.
Most, if not all, network airlines use a company called ATPCo, HQ'd at Dulles airport, to publish and display their fares. ATPCo originally did this as an Agent for filing tariffs with the US and Canadian Governments. Once the government approved the fare ATPCo would bundle up all the approved fare changes and distribute them to other airlines and to the GDS/CRSs. What used to be weekly or bi-weekly tapes couriered around the world has become updates pushed through huge data bases 24/7.
Say BA decided they were tired of M O'Ls comments on fuel surcharges and decided they were going to include it in the fare. They would have to increase your £198 fare to £437. Same total but now shown as one amount. That change, in ATPCo would cost them $0.0025. At any one time I'd guess that BA would have a few thousand fares SFO - LHR. In three or four classes of service, for travel commencing in the next 330 days. But it's not just to London that they have fares. They have fares to all their online cities to the east of London. So multiply those few thousand fares by the number of online destinations and you are soon in the millions, just from one city. Now double that for all the fares to SFO. In addition to their online points add the offline points where they have interline/alliance buddy feed. I'm now losing count ??tens or hundreds of millions??. Remember to change one fare one time costs less than a penny, but to change all of your fares a few times a year costs a large amount of money. Non productive, as the same final price can be accomplished by using a surcharge that gets added to your fare.
Now of course Cryanair doesn't distribute his fares. It's all internal. So when his costs go up his prices go up, but no surcharge so he's a hero. But the price did go up, just nobody noticed.
You are absolutely right that the processing cost would be the same, adding a surcharge to a fare won't cost significantly more than not adding a surcharge to an increased fare, but getting that increased fare, and all its buddies to all the points of sale literally cost millions.
In addition to agents commissions the network airlines don't want to discount there surcharges the same way they discount their fares for Children, Infants, Ships Crews, agents, staff, etc. Slimebuckets.
While I recognise that to always include fuel surcharges in the fare can be very expensive and understand why they do it. However I find the practice of adding surcharges to FF tickets is uncalled for. When I earned my miles I paid the fare plus the surcharge, but when I burn my miles I get only the fare back, and still have to pay the surcharge. Of course I get no mileage credit for what I.did pay.