Japan Airlines Lowers Fuel Surcharges As Of February 1, 2015

Fuel prices have plummeted lately, which is good news all around. That being said, it hasn’t had the impact on airfare that some people were expecting.

Why airfare hasn’t gone down despite fuel prices going down

The most common question this has raised is why it hasn’t resulted in lower airfare. And that answer is surprisingly simple — because the cost of airfare isn’t really tied to the cost of providing it. Instead, like most things in the world, it’s based on what price the market can support.

In other words, when oil prices were super high and the economy was crap, that didn’t somehow give the airlines the power to raise prices. Instead, a lot of them went out of business, capacity was cut, etc. So it’s no surprise that airfare hasn’t gone down, and that airlines are making billions of dollars. The market will eventually equalize itself, though. This game is cyclical — for us, and for the airlines.

That doesn’t explain fuel surcharges

As far as I’m concerned, the real question is why fuel surcharges haven’t been lowered. I wrote a post about this just a few weeks ago.

To some degree this is semantics. Lowering fuel surcharges wouldn’t actually change the fare consumers pay, as the base fare would just be increased accordingly. And that’s fair, because the fuel surcharge isn’t intended to reflect the cost of fuel anymore.

The major implication is for those booking award tickets. Many airlines impose fuel surcharges on award tickets, and when those are disproportionately high, you’re paying a lot of cash for award tickets in some cases.

That’s probably one of the reasons that many airlines have changed the verbiage on these fees from “fuel surcharges” to “carrier imposed surcharges.”

Japan Airlines lowering fuel surcharges

While the practical implications aren’t huge, we do have to give one airline credit for lowering fuel surcharges. Japan Airlines will be lowering their fuel surcharges for tickets booked on/after February 1, 2015.

Via a Japan Airlines press release:

El Segundo, CA – Information as of December 9, 2014;

JAL introduced fuel surcharges in February 2005 in response to rises in the cost of fuel. If the fuel price fluctuates further, we will amend or delete the fuel surcharge on a bimonthly basis. (Please click here for further details of the revision.)

The following surcharge applies to flights operated by Japan Airlines and JAL code-share flights operated by other airlines.

The fuel surcharge for tickets issued on/after February 1, 2015 will be amended as shown below.

We highly appreciate your understanding and cooperation.

Here are their current fuel surcharges for travel to/from the US:

JAL-Fuel-Surcharges-2

While here are the fuel surcharges for tickets issued on/after February 1, 2015:

JAL-Fuel-Surcharges-1

As you can see, those are pretty sizable decreases in fuel surcharges.

JAL-Fuel-Surcharges

If only other airlines did the same… I’m looking at you, British Airways!

Comments

  1. One of my friends who works for FedEx airlines told me that the time between the lowering the cost of oil to when it reaches the airline is very much a slow process. I can’t remember why, but I remember him saying that. It was over drinks…many, many drinks.

  2. @Garrett probably due to hedging, many airlines may not be benefiting from the lower oil prices now as they might have hedged themselves at much higher oil prices.

  3. JAL should be commended very loudly in the blogosphere for this pro-consumer move. Had the action been the opposite, we know we’d have been whining til the cows came home.

  4. Lucky said: “When oil prices were super high and the economy was crap, that didn’t somehow give the airlines the power to raise prices.”

    Or maybe it was widespread consolidation and fortress hubs that gave them the power to raise prices.

    Lucky said: “Instead, a lot of them went out of business, capacity was cut, etc.”

    Care to name which airlines “went out of business” in your view? First the taxpayer bailed them out and then they merged. I don’t recall any of the majors going bankrupt or whatever revisionist picture you’re trying to paint here. Go back and read about Eastern Airlines. That’s what “going out of business” actually means. What you’re describing is called mergers and acquisitions.

  5. lucky, airlines indeed hedge fuel, but in the past few years, I would imagine that they have purchased the option to buy at, perhaps $80, as purchasing the option to buy for much less than prevailing costs gets too expensive. If, indeed, they hedged at $80, recent $60/bbl is an immediate bonanza.

    I should say that I do not know whether they hedge by purchasing crude options or airline fuel options, although the two correlate quite a bit.

    With that said, there is no reason to have a traditional fuel surcharge at all. If it is a risk sharing device, the excuse of anomalously high fuel costs has not existed for years.

  6. I have an AAward in F with JAL from Australia to London booked for February (one-way), cash-component was around 180$. Any chance I can get some money back if I call AA?

  7. Cheers Ben, you are right – I reproduced my trip with the ITA-matrix and it looks like the 40$ YQ is actually for BA, as I’ve added a final LHR-DUS segment.

    Thanks for all the excellent articles btw. Although being Oz-based I can only look envious at all those CC-deals, purchasing US-carrier-miles is just such a great option as flights originating down under are so much more expensive to begin with.

  8. “And that’s fair, because the fuel surcharge isn’t intended to reflect the cost of fuel anymore.” That word, I do not think it means what you think it means. You keep using the word “fair”, but with an entirely different definition to what I know the word to mean. If you mean you find it understandable, or acceptable, or even just okay, then please say so. You abuse the word “fair” quite a lot when justifying corporate decisions that are anything but what the average person knows the meaning of the word “fair” to be.

  9. Still waiting for your list of airlines that “went out of business.” Would also be nice to hear you articulate how widespread abuse of fuel surcharges is considered “fair” in your view. If you connected these dots on your own it should be easy to show your work. On the other hand if this is nothing more than a subconscious regurgitation of something you heard in Gary’s echo chamber then I can imagine trying to explain the rational basis is a rather confusing and tedious experience.

  10. @ Lisa — To clarify, the intent with what I’m saying is that lowering fuel surcharges wouldn’t lower the fare. For 99% of consumers, it’s simply semantics, and there’s no actual difference based on what the fuel surcharges are. But I agree, in the context of that sentence seems off. I apologize.

  11. @ Dax — Sure. ATA, Aloha, Independence, AirTran (for all practical purposes, since they’re being taken over by Soutwest but all their planes are being retired). But beyond that I was also referring to consolidation, so the three “big” carriers as well.

    And “widespread abuse of fuel surcharges?” A very small percentage of passengers do that. And if anything, it would be in the airlines’ best interest to eliminate fuel surcharges and raise base fares accordingly, so that there’s no way for those passengers to abuse fuel surcharges, no?

  12. Planned consolidation through mergers and acquisitions is in no way equivalent to “went out of business.” In that same vein AirTran voluntarily combined with WN as a planned merger and didn’t simply go out of business. That’s an important distinction worth acknowledging. ATA was primarily a government contract carrier and when their primary contract was lost their ancient aircraft had no obvious method for positive revenue generation in the public market. Aloha was primarily a regional cargo carrier that also happened to fly passengers. Independence Air was still in rapid expansion mode when they failed. In other words none of these events were in any way similar to an unplanned market shifting bankruptcy of a established major airline such as the likes of EA and PA.

    The only reason the fuel surcharge scam is can be ignored (for US based revenue pax) is because it has been regulated as a forced inclusion. Many non-rev and non-US pax still have to play the ridiculous fuel surcharge game to this very day. Just as most of us still have to play the nickle and dime game with luggage and seat selection and meals and drinks whenever we’re on a flight that doesn’t recognize our specific flavor of status.

    I believe it’s irresponsible and disingenuous to equate planned consolidation with going out of business. In much the same way that it’s ridiculous when people blamed the loss of refining capacity for the rising cost of fuel without mentioning that the closure of hundreds of domestic refineries were performed unilaterally by the refining industry itself. The airlines can charge more than before not because half of them went out of business but because all of them decided to combine forces and increase their level of influence. Those are two very different developments.

    Now that the tables are turned and passengers have far fewer options for shopping around we’re expected to believe that this was nothing more than an emergency reaction to being beaten down by normal market forces. Nothing could be further from the truth. The only way this becomes a cyclical process is if new carriers become strong enough to leverage lower prices against the entrenched legacy carriers. I really don’t see that happening at all. In fact I see a race to the top of the revenue chart with nearly every airline shoving more and more seats onto fewer and fewer flights.

  13. Lucky – Does US Airways pass on YQ if we redeem JL flighs using DM miles? How about redeeming CX flights using DM? Thanks!

  14. I tried to compare NRT-HAN on JAL on 1/30 and 2/6 one way. The cash component booking with BA avios was $104 for both days. In this the case with BA lying abt fuel surcharge again that will only refund the difference if the customers call in and demand to see the breakdown of the fees?

  15. Looks like theres two “YQ” charges on your ITA screenshot. Which one do you refer to on award tickets? Also, what the difference between YR AND YQ?

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