Qantas raises fuel surcharge yet again, spinning the same stock explanation

AREN’T we tired of listening to the same stock explanation every time an airline announces increases in the fuel surcharge? The announcement is usually prefaced by how much the prices of jet fuel have gone up, and a reminder to the public that fuel makes up the biggest component in an airline’s operations. And before you call the move unreasonable, the airline will have you know that the increase never fully covers the full impact of the soaring fuel cost, in fact barely.

The latest round of known increase comes from Qantas, which will raise the surcharge for international flights on April 12. Yes, yet again, making it an annual affair. And it is the same story that has been used before by all and sundry in the industry.

You hear it so often that you simply go “blah” these days. You no longer care to question or seek to understand. Raising the fuel surcharge is in reality increasing the fare, because ultimately it is the bottom-line number that matters – the full fare of the ticket to include all taxes and surcharges.

Short of more innovative methods to prop up the business, airlines are falling back on surcharges. Qantas had already in February imposed a carbon tax – to compensate for penalty costs imposed on the airlines by the European Union for failing to meet set carbon emissions standards vis-a-vis a carbon emissions trading scheme.

So much about such charges being cost recoveries, they are really revenue earners. The downside is that they may reduce travel or cause a loyalty shift. For Qantas, its home clientele for international operations has fallen to 20% compared to its stronger domestic market of 65%. More Australians are travelling with competitors such as Emirates and Singapore Airlines, therefore making it more expensive is not going to help.

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About David Leo
David Leo has more than 30 years of aviation experience, having served in senior management in one of the world's best airlines and airports. He continues to maintain a keen interest in the business, writes freelance and provides consultancy services in the field.

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