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View Full Version : Fuel Levy - Please Explain!!


flightfocus
4th Aug 2007, 13:19
Can someone who is more familiar with the in's and out's of the process explain how the price of the ticket is calculated. :confused:

As SLF I don't really give a rats low dragging backside that $5 squillion goes to the Howard coffers for annoying me with a security sideshow. Or that Geoff and his co-horts want to sting me for increased fuel prices.

I am ONLY interested in how much of my hard earned I will have to fork over. This current environment where they get away with advertising a 99c fare plus $1600 in taxes, charges and fuel levies is outrageous. :mad:

Call me crazy, but the cost of the airfare INCLUDES the operating cost of the aircraft. Now even though I don't receive millions in KPI bonuses, I can figure out that this includes the fuel used for the engines to turn it into really fast, really hot exhaust.

How in the hell have they been able to "add" an extra fuel surcharge?? Just get your actuarial boffins onto it and publish a new AIRFARE. :ugh:

I know this kind of happens domestically, so why in the hell can't it happen for ALL airfares.

Rant off..... :O

sinala1
4th Aug 2007, 13:45
Eastwest Loco will be probably most qualified to answer that question, but one complaint I have heard from travel agents in the past is that somehow or another due to the smoke & mirrors way some airlines apply the fuel surcharge to the ticket means the airlines don't pay commission on the full amount of $$ the agent collects from the punter on behalf of the airline - the surcharge, for some reason, is excluded from the calculation of the commission % the agent earns.

Lodown
4th Aug 2007, 13:56
It also allows them to bump up the "ticket" price at short notice without changing the printed material and gives the passenger that the increase is outside the airline's control.

woodja51
4th Aug 2007, 21:14
Not really sure why they do the fuel surcharge thing either...the first airline to come up with a ticket price that is just based on common sense will be a first. heres an idea ... ticket price = what you see plus fuel - and this could just be based on the price of gas at the time you travel - ar at least what they actually pay for it. so if oil is low ticket is cheap, oil high .. ticket is high .. there is a great email comparing buying an airline ticket with buying paint at the hardware shop.. cant find it but is astute and would be funny if not so true. best to stay at home... its easier. you should try doing the security show every day for a living.. if they spent the same money on building uncrashable aircraft as they do security we all would be safer.. but what would I know .. only been in this game 30 years..

Brian Abraham
5th Aug 2007, 00:52
Going down this line I guess in future we can look forward to

1. Maintenance surcharge
2. FA salary surcharge
3. Pilot salary surcharge
4. etc etc

Could even give the customer options in line with the buy a meal philosophy. "We can offer you the option of flying on an AC thats had maintenance but it costs more".

RampDog
5th Aug 2007, 02:08
WoodJa, hereís the joke; hope you enjoy it as much as I did.
If Airlines Sold Paint !
Customer: Hi. How much is your paint?
Clerk: Well, sir, that all depends on quite a lot of things.
Customer: Can you give me a guess? Is there an average price?
Clerk: Our lowest price is $25 for a 4 litre can, and we have 30 different prices up to $75 a can.
Customer: Whatís the difference in the paint?
Clerk: Oh, there isnít any difference; itís all the same paint.
Customer: Well, then Iíd like some of that $25 paint.
Clerk: When do you intend to use the paint?
Customer: I want to paint tomorrow. Itís my day off.
Clerk: Sir, the paint for tomorrow is the $75 paint.
Customer: When would I have to paint to get the $25 paint?
Clerk: You would have to start very late at night in about 3 weeks. But you will have to agree to start painting before Friday of that week and continue painting until at least Sunday.
Customer: Youíve got to be &%^#@ kidding!
Clerk: Iíll check and see if we have any paint available.
Customer: You have shelves FULL of paint! I can see it!
Clerk: But it doesnít mean that we have paint available. We sell only a certain number of paint cans on any given weekend. Oh, and by the way, the price just went to $30. We donít have any more $25 paint.
Customer: The price went up as we were talking?
Clerk: Yes, sir. We change the prices and rules hundreds of times a day, and since you havenít actually walked out of the store with your paint yet, we just decided to change. I suggest you purchase your paint as soon as possible. How many cans do you want?
Customer: Well, maybe five cans. Make that six, so Iíll have enough.
Clerk: Oh no, sir, you canít do that. If you buy paint and donít use it, there are penalties and possible confiscation of the paint you already have.
Customer: WHAT?
Clerk: We can sell enough paint to do your kitchen, bathroom, hall and main bedroom, but if you stop painting before you do the bedroom, you will lose your remaining cans of paint.
Customer: What does it matter whether I use all the paint? I already paid you for it!
Clerk: We make plans based upon the idea that all our paint is used, every drop. If you donít, it causes us all sorts of problems.
Customer: This is crazy!! I suppose something terrible happens if I donít keep painting until after Saturday night!
Clerk: Oh yes! Every can you bought automatically becomes the $75 paint.
Customer: But what are all these, ďPaint on sale from $2.50 a litreĒ signs?
Clerk: Well thatís for our budget paint. It only comes in 2 litre cans. One $5 can will do half a room. The second 2 litre can to complete the room is $15. None of the cans have labels, some are empty and there are no refunds, even on the empty cans.
Customer: To hell with this! Iíll buy what I need somewhere else!
Clerk: I donít think so, sir. You may be able to buy paint for your bathroom and bedrooms, and your kitchen and dining room from someone else, but you wonít be able to paint your connecting hall and stairway from anyone but us. And I should point out, sir, that if you paint in only one direction, it will be $100 per can.
Customer: I thought your most expensive paint was $75!
Clerk: Thatís if you paint around the room to the point at which you started. A hallway is different.
Customer: And if I buy $75 paint for the hall, but only paint in one direction, youíll confiscate the remaining paint.
Clerk: No, weíll charge you an extra use fee plus the difference on our next can of paint. But I believe youíre getting it now, sir.
Customer: Youíre insane!
Clerk: Thanks for painting with (fill in the airlineís name).
BTW, buying the paint is still less confusing than buying an airline ticket
:confused: :}

Danger Mouse
5th Aug 2007, 02:43
Ramp Dog, I loved it, thanks very much! I'm going to keep that one.

FYI Flight Focus, its the way the Global Distribution Services (that hold all the tkt bookings) are set up - they keep base fares separate from the taxes. Commissions are paid on base fares. I agree fuel surcharges should be included in the base fares.

Torres
5th Aug 2007, 03:06
By my calculation, the fuel surcharge above 70% load factor on some rural Dash 8 routes pays the entire fuel bill!

I guess in some eyes it is only fair us bush pigs should be subsidising inter city jet routes and executive bonuses! :mad:

Romulus
6th Aug 2007, 00:42
Can someone who is more familiar with the in's and out's of the process explain how the price of the ticket is calculated

Basic pricing principle is that you charge what the market will bear. In times of high demand the market will pay more, lower demand generally equals less (barring price fixing which is why various bodies see price fixing as the be all and end all of corporate evil).

The fuel surcharge is just a mechanism to play with prices. Supposedly to cover rapidly escalating fuel prices it seems to be more of a case that it can be used to preserve a "headline" rate that is suited to advertising.

One thing the Aus govt has done well is to legislate that GST and taxes must be included in ticketed prices. Why this doesn't apply to fuel surcharges etc in retail aviation escapes me.

Same goes for advertising $1 fares for 1 seat on the 11am Syd-Mel route. That must go close to being false & misleading or bait advertising.

But maybe that's just me.

Romulus
6th Aug 2007, 00:50
but one complaint I have heard from travel agents in the past is that somehow or another due to the smoke & mirrors way some airlines apply the fuel surcharge to the ticket means the airlines don't pay commission on the full amount of $$ the agent collects from the punter on behalf of the airline - the surcharge, for some reason, is excluded from the calculation of the commission % the agent earns.

Exactly correct, as a surcharge commission is not paid to agents as it is seen (from a legal sense) as a cost recovery with no profit margin to be shared.

The practical application may of course be used for other things.

satos
6th Aug 2007, 08:44
In the old days the owner/operator wore the costs and any risks associated with the venture.Now it is the other way around.

Tropicalchief
6th Aug 2007, 22:39
Roundtrip airfare CNS-POM $AUD553.00

Actual airfare $205.00
Taxes and surcharges $348.00

From the Airlines of Papua New Guinea website. There is no doubt in my mind that we are all being ripped off.

flypy
8th Aug 2007, 14:25
Having a fuel surchage also means (for QF at least) that it can be a seperate cost item when those pesky Frequent Flyers actually want to redeem points.

papi on
8th Aug 2007, 15:05
I got sucked in today when I filled the car up. It was advertised at 1 cent per litre but when they added on the fuel surcharge it came out to $1.27 per litre!

Silly me sucked in by the glossy ads!