Saturday, March 17, 2012

Airlines Must Explain Basis of Fuel Surcharges

When the U.S. Department of Transportation (DOT) imposed new requirements on airlines and online travel agency (OTA) advertising and disclosure, one overlooked aspect was the "fuel surcharge: component of the cost of the international airline ticket. For the longest time, airlines could simply announce increases in fuel surcharges that are not part of the base fare while still advertising the base fare cost. The DOT now mandates that airlines not only disclose clearly to the public what these fuel surcharges are, but airlines must identify some reasonable baseline of that has to demonstrate a methodology of how the surcharges were calculated. It also brings back a point repeated frequently in this blog: that airlines attribute increases in fuel surcharges to rising fuel costs, but they either do not react promptly when fuel costs decline, or they simply ignore it.