What's Up With Fuel Surcharges on Award Flights?

March 3, 2011 — -- If you read recent reports about a a $500 fuel surcharge tacked on to an frequent flyer award flight on British Airways, did you wonder whether this was the only instance? A reader did:

"A huge surcharge for a "free" trip on British Airways – is this just an isolated scam or the beginning of another round of frequent flyer devaluations?"

The short answer is, "So far, with U.S. airlines, it's isolated, but it's the norm for many other lines."

It helps to understand that many airlines belong to alliances in which the members have varying degrees of reciprocity on policies. Apparently, an airline's decision to impose fuel surcharge associated with an alliance partner airline rests with the carrier holding the miles and issuing the award, not necessarily with the airline operating the actual flight

So when I saw the first reports of the British Airways charge I started to follow up among other big airlines -- foreign and domestic -- to get details on their surcharge policies and agreements with awards partner carriers.

Here's what I found, as of mid-February.

The Big U.S. Lines

Three of the largest U.S. lines, each the local cornerstone of its major alliance, say that the AA/BA charge situation is the only surcharge they're imposing – so far:

At this point, my take is that these and other U.S. lines will try to avoid adding fuel surcharges on their own and partner-line award trips. But that could change, depending on how contractual details among partner airlines may vary in coming months.

Foreign Airlines, Stiffer Surcharges

The story is quite different on key foreign lines I've contacted so far:

Figuring out the exact amount of the fuel surcharge can be something of a challenge, because most lines lump it in with some of the other taxes and fees travelers on "free" tickets are required to pay. Typically they make it very difficult for you to figure out in advance what the fuel surcharge might be.

JAL is the only line I've checked so far with an easy disclosure of fuel surcharges: a fuel surcharge link under the "JAL News" heading on its home page.

Even though most lines don't post such information easily, you can usually come close. On Lufthansa, for example, you can start by entering a trip as if you were going to buy a ticket. Once you select your flights, go to the "fare review" page and click on the question mark box next to the "taxes, fees, and charges" heading. A pop-up menu shows a dozen or two individual line items, one of which is "fuel and security surcharge." Aha: There it is, – almost. You can't separate the fuel from the security, but I suspect most of it is fuel.

And that surcharge is substantial.

As an example, for an economy round-trip starting in late February, Los Angeles to Frankfurt, Lufthansa charges $877, total. Of that, says Lufthansa, $324 is base fare and $553 is "taxes, fees, and charges."

On United, which doesn't add a separate fuel surcharge, the base fare for the same trip is $716 and the "additional taxes and fees" total $146. Presumably, that $146 represents the various mandatory tax, airport, customs, immigration, and similar fees that everybody has to pay.

So I figure that the difference between the two additional fee assessments – $407 – is Lufthansa's fuel surcharge.

This little exercise illustrates what a scam a "fuel surcharge" really is. Do you really believe that, if fuel costs went down, Lufthansa would actually fly you from Los Angeles to Frankfurt round-trip for just $324? If you do, I have a nice bridge on either coast I'd like to sell you.

Dealing With the Surcharge

I've often wondered why so many airlines artificially split the true fare into a phony base fare and an equally phony fuel surcharge, and this exercise might suggest some reasons: So they can hit people on supposedly "free" tickets with what is really a fare supplement? So they can avoid taxes on the part of the true fare they allocate to a fuel surcharge? So they can keep travel agency payments down by excluding fuel surcharges from commissionable fare totals? So they can ding contract-fare customers by what amounts to a retroactive increase in a fixed fare? Take your pick.

This is not to say that all huge surcharges are airline scams. The total surcharge on a BA flight, for example, also includes the British "air passenger duty" that everyone must pay on all airline departures – paid or frequent flyer – from the U.K. For flights to the U.S. or Canada, that fee currently amounts to £60 (about $96) in economy class and £120 in all other classes, including premium economy.

If all of your frequent flyer credit is with airlines based in the U.S., your only current worry will be to avoid using American miles to fly on British Airways. You can only keep hoping that no big U.S. line will start to surcharge any other partner-line awards. On the other hand, if all your credit is tied up with foreign lines, you'll have a tough time avoiding the surcharge.

But if you have miles in both U.S. and foreign lines, or credit card miles you can convert to miles in different lines' programs, you have to do some searching. Say, for example, you want to fly from Chicago to Paris in April on a frequent flyer award (I found low-level award seats available on three lines):

For any given trip, the numbers will vary by route, airline pair and class of service. Just be careful to check out all the options before you commit. And keep your eyes out for more surcharges: Never underestimate the power of a bad idea in the airline business.

Ed Perkins is a SmarterTravel contributing editor and a respected commentator on all aspects of the travel industry, including passenger comfort and rights, travel insurance, the best credit cards for travelers, and car rental. This article originally appeared on SmarterTravel.