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B A Lert
13th Mar 2008, 09:38
With crude now at record levels, it's quite likely that there'll soon be another round of increases to the various fuel surcharges.

All of the CEOs of the Australian carriers bleat about transparency and keeping the air fair. That so, why the hell do they insist on having the same fuel surcharge for every sector, regardless of the fuel used? If they were serious about fairness (apart from 'fairness' to themselves), they would surely apply these surcharges according to the fuel used per sector. A punter from Sydney to Melbourne presently incurs a surcharge of $26 on the Rat and $24 on DJ. A punter travelling from Sydney to Perth pays the same surcharge, no more, no less. If the air was fair, surely the Sydney to Melbourne punter would not be subsidising the bloke going to Perth?

Where is the media and regulator when the consumer requires a bit of protection from capricious and greedy CEOs and CFOs?

stubby jumbo
13th Mar 2008, 10:32
Same old same old Lerty boy.

Yeah we all know you hate JQ and Darth etc etc.

Time you got out into the real world. The majority of airlines have some sort of fuel surcharge. Fuel is going thru the roof .......its called "user-pays".

Time to jump on some other bandwagon..........haven't you heard about the Whales being rounded up in the Anarctic.........now thats something to get fired up about..... not your usual trite Thread offerings.:ugh:

By the way buddy.........the Greed sits with the Shareholders

lowerlobe
13th Mar 2008, 10:42
Where is the media and regulator when the consumer requires a bit of protection from capricious and greedy CEOs and CFOs?

....Now that's a turn up for the books BA.

I thought you were a big fan of Darth and of justifying his hard earned motivational bonus's.....:E

The idea of a sliding scale fuel tax Mmmmm......now wouldn't that give the airlines a chance to make some more bucks.You know they wouldn't drop the tax to Melbourne but just increase the fuel tax on longer flights.

Maybe you are Darth.....:uhoh:

By the way with the retirement of the US Stealth F-117's,I hear that Darth is thinking of buying them and getting them converted for pax use.

That way he saves on landing fee's because the airports don't see them coming or going.

B A Lert
13th Mar 2008, 10:48
Fuel is going thru the roof .......its called "user-pays".

Exactly. But, in reality, it's not as a result of the application of a common surcharge.

404 Titan
13th Mar 2008, 13:31
justapplhere
Why then is this cost not reflected in the bottom line advertised fare instead of simply added to (and hidden), in the invisible taxes/charges ripoff?
One big reason is it isn’t commissionable to the travel agents. I believe there is an ongoing court case in Aus right now brought on by the travel agents vs various airlines, QF and CX just being two.

Lodown
14th Mar 2008, 04:07
For all those punters out there, be it known that I am considering a new airline entry.

Ticket price anywhere in Australia: FREE

That's right, everyone gets a ticket at no charge. Prior to issuing the ticket, there will be a fuel surcharge, pilot surcharge, management surcharge (a big one), cabin staff surcharge, maintenance surcharge, ATO surcharge, navigation surcharge, wear and tear on seats surcharge, baggage surcharge, ground staff surcharge, sandwich surcharge and finally a surcharge just because I know there are several things that I forgot to itemise.

lowerlobe
16th Mar 2008, 21:04
justapplhere......

I think Lodown said it quite well.

The airlines don't want to put the prices up in a transparent and obvious manner so they came up with the fuel surcharge.

Lodown's sense of humour might have been a bit subtle for you.....

Peter Fanelli
16th Mar 2008, 22:18
The airlines don't want to put the prices up in a transparent and obvious manner so they came up with the fuel surcharge.


I may be wrong here and it may also be different in Australia but I believe surcharges are used as opposed to changes in the actual fares because fare changes require approval of some regulatory body.
Surcharges can be added and removed at will by the airlines.
When I was involved in airfreight in the US it was $x.xx/pound of freight and changed regularly with fluctuating oil prices.

Lodown
17th Mar 2008, 16:19
Justapplhere, I didn’t know you had a mandate on the direction of the discussions on Pprune. Ask a sensible question and you might get a sensible answer, but who made you the arbiter of responses to B A Lert’s post? Sorry to prick your overindulgent sense of self-importance.

I think you’ll find your answer in several of the posts above. Another explanation to add to the mix: ticket prices and the associated advertising are generally set and printed well in advance. As PF mentioned, surcharges allow for last minute adjustments to reflect price adjustments in the rapidly escalating and hard to predict cost of fuel. I’m sure it dovetails nicely with the accounting software too.

And to respond to B A Lert’s initial post until you hijacked it, it appears as though the fuel surcharge is being used as a means of increasing net revenue and adjusting a fare to match its market premium, rather than as a “user pays” fee based on fuel consumption on specific routes. It looks very much like a grocery chain that charges one price for a litre of milk in Sydney’s western suburbs and a higher price in the stores on the North Shore simply because the residents of the North Shore can and are prepared to pay more. B A Lert is questioning whether the fuel surcharge has crossed the line between fair business practise and unethical market gouging.

1946
18th Mar 2008, 01:05
If the airlines are charging fuel surcharges why are they running on emty. Monday overheard 'Monstar Flight 701 Melbourne to Hobart ask for a direct diversion to Launceston re weather at Hobart because of insufficent fuel for a return to Launceston. What ever happened to the rule of sufficent fuel to an alternate plus 45min reserve.

Ralph the Bong
18th Mar 2008, 01:58
That rule disappeared in about 1946.

Falling Leaf
18th Mar 2008, 09:22
Another possible reason for the use of the fuel surcharge could be the psychological aspect; that the charge is just a temporary measure that will soon be removed once we get back to the status quo of the previous decade, i.e. 25USD/barrel oil. What the CEO's of all these airlines do not want the traveling public (or their shareholders) to come to terms with is that we have probably seen the end of oil below the $100/barrel mark. Without blathering on about peak oil on this thread most of us PO believers know that airlines are the 'canary in the coal-mine' when it comes to adding up the list of which companies are going to hit the wall first with rising oil prices.

While the inflexibility of regulations, marketing etc may determine the need for a set price in advance, most carriers do hedge their fuel for set periods which largely negates the need for short term pricing changes in the way of a fuel surcharge as suggested above.

An article in The Age on Monday contained a few interesting comments, one being that most airlines believe that due to price sensitivity any airfare rises from here in the current economic climate will reduce demand for seats, and additionally that QF have put a freeze on recruiting - I think the article said that all new hireree's had to be approved by Dixon himself.

Could this be the beginning of the end of the very short term pilot shortage we enjoyed in Australia as airlines start parking aircraft and canceling aircraft orders due to falling pax numbers?

lowerlobe
18th Mar 2008, 21:12
An article in The Age on Monday contained a few interesting comments, one being that most airlines believe that due to price sensitivity any airfare rises from here in the current economic climate will reduce demand for seats, and additionally that QF have put a freeze on recruiting - I think the article said that all new hireree's had to be approved by Dixon himself.

Wrong...Qantas is at the moment hiring a lot of Cabin Crew for new aircraft and destinations......

Now if they want Cabin Crew they are going to want pilots for those aircraft....

Darth has had the final say in what the company does and does not do since he started.That has been one of the many problems in that no one is game to make any decisions for fear of losing their job .....and that is not the way to run any business.

Could this be the beginning of the end of the very short term pilot shortage we enjoyed in Australia as airlines start parking aircraft and canceling aircraft orders due to falling pax numbers?
What falling pax numbers.......:confused:

If aircraft are being parked it's because of lack of crews not because of falling pax numbers.

Falling Leaf
18th Mar 2008, 21:36
While pax numbers are not falling at the moment leading to operators parking their aircraft, my comment above was to suggest that they will start to fall as airlines are forced to increase the cost of the ticket price or surcharge as they come off their hedged fuel contracts and have to pay the full price for oil which looks set to stay above USD100 a barrel.

How much domestic airline travel in Australia is discretionary? When that spare $300 you used to have gets eaten up by high grocery bills and filling up the 4WD, maybe joe punter can't afford anymore to fly to Billoh's wedding in Sydney...:)

Falling Leaf
19th Mar 2008, 03:27
Found it, emphasis are mine.

Air NZ raises fares
Mathew Murphy
March 17, 2008
Air New Zealand will raise fares on flights to Australia and the Pacific Island from the end of the
month becoming the latest airline to succumb to rising fuel costs.
The airline's group general manager Bruce Parton said fares would rise by an average of 3% from
March 26.
''When domestic fares were last increased due to fuel costs in May 2006, the price of Singapore jet
fuel per barrel was $US87. Today it has reached $US130 with a $US10 increase in the past month
alone. This recent price escalation has left Air New Zealand with little option but to increase fares.
A decision on the scale of long haul fare increases is expected to be made within the next fortnight,''
he said.
Earlier, Virgin Blue has refused to rule out a further fuel surcharge on fares as the airline industry
struggles to cope with record high oil prices that show no signs of easing.
Qantas chief financial officer Peter Gregg had told BusinessDay that Qantas might pass on fuel costs.
In a leaked email from Qantas chief executive Geoff Dixon to senior staff, Mr Dixon said the fuel bill
could be $1 billion higher than this financial year.
"Consequently, our operating costs will increase significantly," Mr Dixon said in the email.
Mr Gregg said: "We're looking at increasing the fuel surcharge, but we haven't made any decision yet
and we will wait and see how the market settles down."
Virgin Blue chief financial officer Keith Neate said he was alarmed by the price of oil, now at about
$US110 a barrel, but that the airline had a strong hedging position for this financial year.
"We will continue to monitor these (hedging) levels, but obviously the current record prices for crude
are a major concern for us," he said.
Mr Neate said Virgin Blue would try to balance the rising cost of fuel on its business with the risk
that raising ticket prices could halt demand for air travel.
"We announced last December that we would introduce an increase in our fuel surcharge in February
this year - which Qantas subsequently followed - and we will continue to monitor our surcharge
levels," he said. "But the reality is we operate in a price-sensitive market. Any increase in pricing has
a corresponding impact on demand."
Qantas' fuel costs are fully hedged for this financial year but the airline has only 25% hedged from
July, at $US83 a barrel.
A spokesman for Tiger Airways, Matt Hobbs, said the airline did not have a fuel surcharge on its
tickets and did not foresee imposing one."I think the oil price is a challenge for everybody, but we are confident with our position that we can
meet that challenge," he said.
"We don't expect there will be a fuel surcharge on ticket prices any time soon because we manage
our costs better than the legacy airlines do. We have no office blocks, no huge overheads.
"We also have a very proactive hedging position on fuel and are confident that it will help us remain
the leader in low fares."
Mr Dixon's email also issued a freeze on staff hiring unless personally cleared by himself or Mr
Gregg. Virgin Blue and Tiger said they did not have a freeze on hiring.
The blow-out in fuel costs is also likely to affect Qantas' budget carrier Jetstar, especially as it moves
towards its international expansion.
Analysts expect the news to hit Qantas' already vulnerable share price when the sharemarket opens
today.
Qantas shares have slumped 26% from this time last year and are now at $3.71.

rescue 1
20th Mar 2008, 19:45
Mr Neate said Virgin Blue would try to balance the rising cost of fuel on its business with the risk that raising ticket prices could halt demand for air travel.

...investors have become increasingly worried about the health of the highly cyclical industry as it struggles to deal with soaring costs and faces a possible economic slowdown.

Ryanair's chief executive, Michael O'Leary, warned last month that a "perfect storm" of expensive fuel and recession could see the low-cost giant's profits cut in half next year.

I had heard that VB have followed QF's lead and have implemented a hiring freeze for non-operational roles.

It's going to get tough and only the savvy are going to survive. With rising costs is it any wonder we see suggestion of VB calling for an ultra LCC [how I'm not sure???]

Has the airline business had its day in the sun? The mortgage belt that fed the growth of the value end [VB, Easy, Jet*, Tiger] of this industry will be the first hit, and travel will no longer rate high on their to do list.:hmm:

RedTBar
20th Mar 2008, 22:42
If thats the case then Airbus must be worried about picking the wrong horse and building the 380.

Boeing's forward planning might have got it right with the 787 and if so Airbus might be in big do do's if it can't recoup the cost of designing and building the big croissant if it doesn't sell enough.

Falling Leaf
7th Apr 2008, 08:55
Skybus Airlines goes bankrupt
April 7, 2008 - 9:06AM

Skybus Airlines, a US low- fare carrier that started operations less than a year ago, filed for bankruptcy after stopping service.

The airline is the third carrier to seek bankruptcy in the past 2 1/2 weeks on rising fuel costs and a slowing economy, joining Aloha Airgroup and ATA Airlines. Skybus started service on May 22, with some tickets as low as $US10 for a four- hour flight. ''Our financial condition is such that our board of directors felt it had no choice but to cease operations,'' Skybus said in a statement on its Web page yesterday.

The closely held Columbus, Ohio-based airline has assets of $US100 million to $US500 million and debt of $US50 million to $US100 million, according to a Chapter 11 petition filed yesterday in US Bankruptcy Court in Delaware. The largest unsecured creditor is Chicago-based World Fuel Management, with an $US8.5 million claim, according to the filing.

Separately, Champion Air, a carrier based in Bloomington, Minnesota, will cease flying May 31 because of high jet-fuel costs for its Boeing 727s and the loss of charter contracts for 13 National Basketball Association teams to its former owner, Northwest Airlines. There will be no bankruptcy filing, said Jon Austin, a spokesman for the carrier.

Aloha Shutdown Honolulu-based Aloha said on March 30 that it was shutting down after it couldn't find a buyer or financing to keep flying. It filed for Chapter 11 protection in the US Bankruptcy Court in Honolulu on March 20.
Aloha, which mainly flew inter-island routes in Hawaii, previously filed for bankruptcy in December 2004 and emerged from that case in February 2006.

ATA, a carrier based in Indianapolis, filed for Chapter 11 protection in the US Bankruptcy Court there on April 2 and ceased operations, citing high fuel prices and the loss of a contract for military charter flights. ATA emerged from a bankruptcy case in February 2006.

The cost of jet fuel has risen 62% in the past year, according to the International Air Transport Association, a trade group representing 240 airlines. The Airbus A319 flown by Skybus carries 6300 gallons of fuel. Skybus operated a fleet of 11 Airbus jetliners and served 15 cities. Skybus placed an order in 2006 for 65 Airbus A319s, with a total list price of $US4.3 billion. Airbus

SAS was named in court papers as the company's second-biggest unsecured creditor, with a $US1.9 million claim, which Skybus said is in dispute. The airline tried to emulate Dublin-based Ryanair, Europe's biggest discount airline, which often gives away tickets while charging fees for baggage and selling merchandise and ad space in cabins.

:uhoh:

B A Lert
23rd May 2008, 03:11
Has Qantas seen the light by announcing a fare increase to cover higher fuel costs rather than increasing the surcharge? Would the surcharges now be greater than the fares being collected? This is the latest from Qantas:

Qantas to Increase Fares in Response to Record Fuel Prices

Latest News
Sydney, 22 May 2008

Qantas announced today that it would increase its international and domestic fares for tickets issued in Australia on or after 4 June.

The Chief Executive Officer of Qantas, Mr Geoff Dixon, said Qantas would increase international fares by approximately 4 per cent and domestic fares by approximately 3 per cent. This followed increases of approximately 3 per cent for international fares and 3.5 per cent for domestic fares earlier this month.

He said the increases were unavoidable given the continuing high cost of oil.

"Oil and jet fuel prices continue to break records, with West Texas Intermediate spot crude oil passing US$134 a barrel overnight and Singapore Jet Fuel today trading at nearly US$166 a barrel," Mr Dixon said.

Mr Dixon said Qantas had increased its fuel hedging and now had cover for 59 percent of expected crude oil requirements in 2008/09 at $US111.81 a barrel WTI, inclusive of option premium.

"Despite our hedging activities, fare increases, surcharges, and strong focus on managing costs across our operations, we will not cover these higher fuel costs, which at current prices will add more than A$2 billion to our fuel bill in 2008/09.

"We are continuing to target further efficiency improvements which now include a review our network and schedules of Qantas, QantasLink and Jetstar."

Why hasn't Jetstar announced any fare increases as it is subject to the same market forces as its owner?

Also, will the "review our network and schedules" mean more Jetstar takeovers of Qantas routes on account of it's alleged lower cost base? Qantas people, more than ever before, need to watch what is happening very carefully. Here is another golden opportunity for GD to diminish size and influence of the Rat even more.:mad:

Torres
23rd May 2008, 03:41
The fuel surcharge on some QF regional turbo prop sectors almost pays the total fuel bill! :mad:

Fuel is simply one component of an aircraft's operating cost and should be recovered by air fare increases - not fixed surcharges.

I guess it is only a matter of time before we also see a "Pilot Surcharge" when QF and DJ give the pilots their large, long awaited pay increase! :E