With a 40% drop in fuel prices, will Qantas reduce its fuel surcharge?

7 replies

willvill

Member since 17 May 2012

Total posts 32

I'm sure this has been raised here previously ( I cant see it) however is it fair to assume that with a 40% drop in fuel prices in the past 6 months and NO drop in fuel surcharges from Qantas (who squeal the loudest) there will never be a reduction in the fuel levy?

paa

Member since 21 Dec 2012

Total posts 43

It is a good question, and in my view it has a simple answer. The purpose of the fuel surcharge is to componentise the costs and pricing, and then be able to broaden the customer base who pay the component, in this case specifically redemption seats. In other words, it is a scam to devalue loyalty points in a sly way.

Without having knowledge of QF's fuel price hedging, I would suspect we wont be seeing them reduce the fuel surcharge until there is strong competetive or regulatory pressure to do so, as it may very well be a significant contributor to their return to profitability. Remember that whenever it is lowered, this has the effect of increasing the real purchasing power of loyalty points. A bit like Newtons 3rd law in at work.

johnaboxall

Virgin Australia - Velocity Rewards

Member since 24 Aug 2011

Total posts 384

From a layperson's perspective - yes, however the answer is no. QF and other airlines hedged their fuel prices far ahead at the older (more expensive) prices. In time, perhaps - if oil prices stay low. 

johnaboxall

Virgin Australia - Velocity Rewards

Member since 24 Aug 2011

Total posts 384

paa beat me by 37 seconds, well done :)

Serg

QFF

Member since 12 Apr 2013

Total posts 870

All airlines will continue to charge us as much as they can and none will reduce price because of fuel, yet all of them saying that vast majority of cost is fuel. If oil stays low for a year or so then you may expect some price reduction due to competition. Meanwhile airlines will enjoy extra profit.

I suggest make a good use of low petrol prices and travel inside Australia by car – believe me there are plenty to see.

TheRealBabushka

Member since 21 Apr 2012

Total posts 2,059

They key to avoid the pinch from fuel surcharge is to pay outright for flights. The fuel surcharge is designed to ensure airlines cover some marginal cost for flight redemptions. When purchasing flights outright, the market is competing on total cost irrespective of the breakdown. Save your points/mileage for upgrades.

Merc25

Qantas - Qantas Frequent Flyer

Member since 29 Jun 2013

Total posts 317

It will be interesting to see if the fuel surcharge goes up when fuel prices start to rise again !!

Greg84

Member since 03 Nov 2014

Total posts 127

According to Flight Centre the fuel surcharges are designed to reduce the commission paid to travel agents. I still don't understand how they can reasonably argue there needs to be a spearate fuel levy. You run an airline, one of your costs is fuel & it should be included in the price. If it was a logical to seperate we'd have a staff surcharge etc It's a joke & should be out-lawed. Price should be fare + taxes (real taxes) only

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