Passenger uproar grounds latest fuel surcharges
US airlines just days after doubling their fees to $40 for round-trip tickets backed down and began rolling back the fuel surcharges because of passenger rebellion.
“It was the latest setback for the airline industry, which has been trying to pass the cost of higher fuel costs to passengers by tacking on surcharges to the price of the ticket,” says The Los Angeles Times.
A similar effort two weeks ago to raise the surcharge to $50 was also withdrawn, with fuel surcharges remaining at about $20 for most of the large airlines.
“This is a behavior that we are likely to see for the duration of 2008,” said Amy Ziff, editor-at-large for online travel service Travelocity.com. “They’re trying to recover the cost of fuel, so they’re going to find some way to pass it to customers.”
Ms Ziff said travelers needed to be particularly savvy this year while shopping for low fares, which may include a surcharge one day but not another day.
But despite the latest failed attempt, fares in general are expected to rise this year. Air travel during spring break is expected to rise 10% to 12% compared with the same period last year, according to Farecast.com, an airfare tracking website.
John Rauser of Farecast said several factors were affecting airfares, including rising oil prices and fuel surcharges, as well as rumors of airline consolidation and reduced capacity.
Airlines blame escalating fuel expenses for their attempts to raise the surcharge.
Even perennially profitable Southwest is facing difficulties.
The airline — which has not posted a losing quarter since early 1991 — doubled its profit in the fourth quarter, which analysts attributed to its financial wizardry in hedging against high fuel costs.
But at the same time, Southwest’s CEO suggested the airline might lose money in the first three months of this year.
“I can’t give you a guarantee that there won’t be a loss in the first quarter,” said Chief Executive Gary Kelly.
“Our goal for the year is to drive earnings increases. It will be harder in the first quarter because of that cost hurdle,” Kelly said in a conference call with reporters and analysts. “If the costs are going up, the revenues will have to follow or we’ll be at risk there.”
Report by David Wilkening
David
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