Major Canadian carriers jettison fuel surcharges

Tag : oil fuel
Chris Sorensen
Business Reporter

Air Canada has dropped a $25 fee charged to passengers who check asecond piece of luggage and is ditching fuel surcharges of between$20 and $60, a move quickly followed by rival WestJet Airlines Ltd.and Toronto's Porter Airlines.
Air Canada said yesterday the decision to eliminate the fee for asecond checked bag was made because of the retreating price of oil,which hit a seven-month low of $90.51 (U.S.) a barrel two days agoand is now trading around $97 per barrel.
The move comes just before the winter travel season when passengerstend to fly with more luggage.
Ben Smith, the airline's executive vice-president and chiefcommercial officer, said in a statement the change in policyreflects the "expressed preferences" of Air Canada customers andcomes even though the cost of fuel remains "highly volatile and farabove historic norms."
The change takes effect Tuesday.
Air Canada first implemented the fee last spring after severalmajor U.S. airlines adopted similar charges. Rival WestJet neverfollowed Air Canada's lead and continues to let passengers check upto two pieces of luggage for free.
As for the fuel surcharge, Air Canada said the decision toimmediately incorporate the add-on charge for domestic andtransborder travel into its base fares is intended to make theairline's pricing more transparent, although surcharges will remainon flights to international markets.
In May, the airline began adding fuel surcharges of $20, $40 and$60 to short-, medium- and long-haul flights within North America.Calgary-based WestJet later followed with its own surcharges of$20, $30 and $45, while Toronto's Porter Airlines adoptedsurcharges of either $20 or $40.
Like Air Canada, Porter said yesterday that it was rolling itssurcharges into its base fares.
CEO Robert Deluce said in an interview the upstart airline hasfavoured "all-in" pricing from the beginning but, effectively, wasforced to follow the practices adopted by its rivals.
"The difficulty is that you have to present (fares) in a mannersimilar to the larger carriers. If you don't these days, the Webbrowser goes winging through and doesn't even land at your site."
WestJet, meanwhile, claimed yesterday that it was eliminating itssurcharges entirely.
But observers noted that rolling in the fuel surcharges oreliminating them altogether amounts to the same thing sinceairlines tend to advertise the same base fares on most routes.
"Ultimately, it's a competitive market place," said Rob Kokonis,president of airline consulting firm AirTrav Inc.
"Whether you have a surcharge or don't have a surcharge, if you'renot price-competitive with the next guy, you're not going to getthe passenger.
"It's a price-driven market and that's the bottom line."
Critics have called fuel surcharges deceptive because they allowairlines to advertise lower base prices to consumers.
Analysts have argued they are a more effective way for airlines toraise ticket prices since regular fare hikes tend to be eroded byseat sales in competitive markets.