Newspaper article International Herald Tribune

Fuel Surcharges That Rise but Never Fall ; Travel Managers Begin Taking Issue with Factor in Growing Business Costs

Newspaper article International Herald Tribune

Fuel Surcharges That Rise but Never Fall ; Travel Managers Begin Taking Issue with Factor in Growing Business Costs

Article excerpt

Fuel surcharges that go up, but never down, have begun to become an issue in negotiations between airlines and corporate travel managers over the cost of airline tickets.

Rising fuel surcharges have begun to become an issue in negotiations between airlines and corporate travel managers over the cost of airline tickets.

The charges were initially tied to the rising cost of fuel, but industry experts say they have turned into a way for airlines to increase fares.

"Airlines can use fuel surcharges as indirect fare hikes and masquerade them as fuel surcharges," said Henry Harteveldt, co- founder of the Atmosphere Research Group and an airline and travel industry analyst in San Francisco.

"Airlines are quick to raise fuel surcharges when fuel costs increase, but slow to reduce the surcharges when fuel prices go down," Mr. Harteveldt said. "It is a way for an airline to indirectly raise its fares without signaling to its competitors that it's trying to raise fares. The base fare is almost a form of pricing camouflage."

Corporate travel managers say that while they have begun to raise the issue with airlines, the surcharges themselves have not been discounted.

"It's one element that needs to get into the mix for negotiation but I have not seen any discounting on that," said Michael Steiner, an executive vice president of the Ovation Travel Group, a travel management company in New York. Rather, he said, travel managers can use fuel surcharges to negotiate discounts on the base fare.

Mr. Steiner said companies had also been trying to negotiate lower fees for Wi-Fi, baggage, legroom and other amenities that airlines used to provide as part of the ticket price but for which they now charge extra.

The International Air Transport Association, a trade group for airlines, declined to comment on fuel surcharges. In an e-mail, a spokeswoman, Miriam Ashong, said the surcharges were "quite a sensitive topic and as such we cannot make any comments at the moment."

Victoria Day, a spokeswoman for Airlines for America, the trade group for airlines in the United States, said in an e-mail, "For antitrust reasons, we cannot comment on specific fuel surcharges."

Fuel surcharges, Mr. Steiner said, can increase the base fare 10 percent to 50 percent.

Carlson Wagonlit Travel, a business travel management company, has found that as fuel prices fluctuated, the surcharges either stayed the same or rose. "Fuel dropped back down but carriers have not dropped fuel surcharges," said Brent Eisenach, director of the CWT Solutions Group, Americas, based in Minneapolis.

The company estimated that fuel surcharges now represent about 7 percent to 12 percent of total corporate travel spending. "Fuel surcharges are one of the many variables to look at," said Joel Wartgow, senior director of the CWT Solutions Group, Americas. …

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