Two sides of the coin

Reduction in fuel prices; does it translate to benefit to customers?

The low-cost carrier Ryanair had urged UK consumers last week not to  pay unnecessary charges by avoiding high fare airlines.
Chief marketing officer, Kenny Jacobs, had said: “It’s grossly unfair on consumers that high fare airlines such as BA and Virgin continue to charge fuel surcharges, squeezing customers for every last drop.

Virgin Atlantic responds to this criticism of fuel surcharges on its fares by insisting it has cut the charges twice in the past two
months. The carrier had the knocked £20 off its fuel surcharges on return flights on January 28 after making a £10 cut in December last year.

A Virgin Atlantic spokeperson told to Travel weekly, that they buy their fuel months and years in advance, which means recent falls in
the price of oil will not impact their costs. Despite that Virgin Atlantic moved to reduce their fuel surchages shortly before Christmas
and again in January.

The spokeperson told that: “Fuel is the biggest element of the fare. But it is one of several things we break out. The benefit of breaking out the costs is that you can show what is outside the airline’s control. The surcharge does not fully recover the cost of fuel. There isn’t a strong correlation between the reduction in the cost of fuel
and the reduction in our costs. We’ve done this in spite of that to be ahead of the industry. We are not feeling much benefit from the change  in the oil price, but we are doing what we can.”

Large carriers added fuel surcharges to the fares as the oil prices touched record highs during the mid of the last decade. For long haul flight, fuel can cost upto 50% of the price.Airline association Iata has noted that no airline’s surcharges cover the full costs of fuel – they only recover part of it – and all must be included in the fare.

As oil prices fall, these savings should be passed on to customers. Ryanair guarantees no fuel surcharges.However, Ryanair has made clear in the past that its customers do pay the full price of fuel in the
carrier’s fares.

Er Jigna Shah  [BE, MBA]

Sub Editor

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