What’s the dullest capital in Europe? Admittedly, I haven’t visited them all – Tirana and Vaduz remain on the bucket list – but for my money the answer has to be ‘wonderful’ Copenhagen: when a city’s biggest tourist attraction is a statue of the Little (and she is very little) Mermaid, you know you’re in for a challenging couple of days. However, it is business rather than pleasure that dictates that by the time you read these words I shall have reacquainted myself with Denmark’s metropolis.
The reason I mention all this is something I noticed when I booked my flight with SAS. The return fare for Heathrow- Copenhagen was £210.18, of which “taxes and carrier imposed fees” were £110.18, more than half the total price. The booking confirmation went on to state: “Ticket and fuel surcharge are non-refundable.” The “fuel surcharge” part of that statement, amounting to £46.30, was what got my goat, because it seemed a supreme example of how airlines have had their cake and eaten it ever since fuel surcharges somehow became permanent additions to ticket prices about a decade ago.
What is fundamentally wrong here is that airlines treat fuel as a separate cost because it suits them, but don’t follow through the logical consequences of having made that cost separate when it doesn’t suit them. Fuel should not be treated separately at all, because it is an essential cost of doing business – just like buying aircraft or employing crew (though I bet Michael O’Leary has at least dreamed about switching to unmanned drones).
However, they get away with it and, as the Advito 2015 Industry Forecast points out, airlines now prefer to increase the YQ charge (the name of the box for fuel surcharges on a ticket) instead of the base fare. That’s for two reasons: one is that airlines give discounts on fares but not YQ charges; the other is that carriers pay less tax on YQ charges.
So, coming back to my flight to Copenhagen: it’s fair enough that my cheap fare is non-refundable, but if SAS has chosen to isolate the fuel surcharge, how can it justify not refunding fuel that I won’t be consuming? And that’s not the worst of it. According to Advito, YQ charges (on average across all carriers – I’m not singling out SAS here) have continued to rise over the past two to three years despite fuel costs remaining stable during that time. Inconsequence, YQ charges have grown over that period from 13 per cent of the total ticket cost to 16 per cent (or, in my case, 22 per cent).
As a result, Advito says, on some European routes YQ charges exceed airlines’ entire fuel costs – not just the fuel price rises. In recent years, the response from airlines was often, and I paraphrase here: “Give us a break. We’re losing money and need every revenue-raiser we can find to stay afloat.” Well, most airlines have been coining it over the past couple years, so I think now is a good time for buyers, both collectively and individually, to start getting stroppy. Let’s press for a rational restructuring to end what Advito quite rightly calls “the great YQ box scandal”.
For the latest edition of BBTI asked the great and good to plonk their crystal balls on the table and tell us what will happen to business travel in 2015 – but here’s one of my own. “Would you let your daughter go with a Rolling Stone?” was a famous headline in the 1960s; but a question I believe travel managers will increasingly ask themselves next year is: would you let your travellers go with Uber and Airbnb? I predict a duty of care headache for travel managers if they allow these suppliers – and I predict a riot among travellers if they don’t.