With oil prices at a sustained low, you might wonder why do my award tickets incur so many fees?
Carriers got wise to the fact that they could no longer tack on exorbitant “fuel surcharges” and avoid the scrutiny of regulators when the price of oil dropped by more than 50%. Why a separate fuel surcharge but not a separate labor charge, catering change, and cleaning charge? After all, isn’t fuel just one part of the cost of doing business? Fuel costs have not been volatile in years.
But rather than just eliminate the fuel surcharge, carriers simply renamed it to “carrier imposed fees” or “carrier surcharge”.
What is a carrier imposed fee? Well, we don’t know. It appears as “YQ” in the fare breakdown but the contents of the “carrier imposed fee” remain shrouded in mystery. Ask a reservations agent what this is and they will invariably tell you “fuel surcharge”, underscoring the questionable nature of these fees. Practically, it is a way for airlines to quickly change flight pricing without re-filing fares.
But even if we don’t know exactly what a carrier imposed fee really is, we do know it in intended for: revenue. It has nothing to do with fuel. Carriers promise you “free” award tickets with your miles, but redeem on British Airways, Lufthansa, or Virgin Atlantic (just to name three) and you’re met with several hundred dollars – sometimes over $1,000 – in additional fees. By classifying this as a “fee” rather than as part of the ticket price, airlines can claim with a straight face that you are getting a free ticket and just paying taxes/fees. But don’t be fooled: there is nothing “free” about paying $1,100 out of pocket for the privilege of redeeming your miles to fly from New York to London.
And how do we know these aren’t really for fuel? Because sometimes when you travel longer distances, you pay significantly less in fees.
The Smoking Gun
Take this example with the following Lufthansa itineraries using Aeroplan—
Fly from LA to Frankfurt and the taxes/fees run. Of that, 606.80CAD is a carrier surcharge.
But fly from LA to Frankfurt on the IDENTICAL FLIGHT and connect to Amman and look what happens to the carrier surcharge…
How does an extra flight, which burns more fuel and incurs additional expenses, have the effect of greatly reducing out-of-pocket expense?
Here’s the answer: because the fees are a sham.
And it’s not just this city pair, by the way. I could point to dozens, probably hundreds, of additional examples:
I’m not calling for regulation, per se. I’m in favor of “letting the market work”. But I do believe so-called “carrier imposed fee” are objectively unethical.
View from the Wing also offers a helpful discussion on this topic.