Reader Question: Fuel Surcharges

Caraline writes:

BRITISH Air charged me just this week over 400.00 in fuel charges for an American Air flight from Boston to Paris. My friend who booked the same flight on American did not have a fuel surcharge. We both used our frequent flier miles. Something is wrong. What can be done. I wanted to be on same flight as friend so I booked it. BA said no fuel charges on domestic flights or flights to far east. I used 45000 miles and still had to pay 601.00 in total. My friend only had to pay 87.00

On domestic awards inside the U.S., frequent flyer programs like American’s and United’s will only charge you the $2.50 per segment (not to exceed $10 roundtrip) “September 11th Security Fee.” Until 10 years ago domestic awards really were ‘free’ but when this expenses was added onto airline tickets the major carriers didn’t absorb it on awards but began passing it onto consumers.

All airlines add taxes onto international frequent flyer award tickets. Airport taxes, immigration taxes, etc.

Here’s the fare breakdown for a trip between New York and London next month:

I took a random set of dates and came up with a total cost of $750.40.

That breaks down as:

  • $111 Base fare
  • $438 Fuel surcharge
  • $201.40 Taxes

When you redeem miles for this ticket with a US-based frequent flyer program you’ll pay the $201.40 in taxes. If you book by phone, there may be a telephone booking fee. US Airways adds a fee for international awards, and also for partner awards. But it’s fairly standard to pay a couple hundred bucks in addition to miles when redeeming an award for international travel.

But most non-U.S. frequent flyer programs also add fuel surcharges to the cost of an award ticket. That means for this $750.40 ticket, a frequent flyer redemption would cost $639.40 (taxes plus fuel surcharges) in addition to the miles!

British Airways Avios adds fuel surcharges onto all award tickets when a paid ticket would also incur a fuel surcharge. There’s no fuel surcharges on American Airlines or Alaska Airlines domestic awards, because those airlines don’t add the charges onto those tickets for paid travel. There’s also no fuel surcharges on American or LAN flights to and from South America, again because those tickets don’t have fuel surcharges when purchasing paid travel.

But transatlantic flights always incur fuel surcharges with the British Airways frequent flyer program. Which means that it almost never makes sense to redeem for international coach travel using the British Airways Avios program.

While fuel surcharges can and sometimes do vary based on class of service, it’s not usually a significant difference. You’ll pay roughly the same taxes and fees on a coach ticket as on a business class ticket. In the case of this London award, 45,000 miles roundtrip is saving only the $111 base fare. But for a business class ticket, 90,000 miles roundtrip would save several thousand dollars. It’s the same out of pocket $639 — plus a higher luxury tax for departures originating in the U.K. – for business class as for coach.

Recognizing how onerous these fuel surcharges are, SAS EuroBonus removed them from award redemptions 2 years ago. This was a huge move. SAS remains about the only non-U.S. program not fleecing their members in this way.

British Airways, when they introduced the new Avios program in November, reduced fuel surcharges on intra-Europe award tickets for those members who have earned miles in their account within the preceding year. Since deep discounted paid tickets on routes competing with low cost carriers would sometimes offer reduced fuel surcharges as well, it was not uncommon previously to see intra-Europe coach award redemptions that cost more in taxes and fees than a paid ticket would have.

I used to say “non-North American programs” imposed fuel surcharges, because Aeroplan only added those fees to awards actually booked on Air Canada… until the fall when they started imposing the fees on awards booked on most but not all partners. (This came shortly after no longer including US Airways domestic first class flights on international business class awards and gutting their reward chart.)

And it’s not even exclusively non-U.S. carriers. American Airlines adds fuel surcharges onto awards on British Airways flights. Delta adds fuel surcharges onto many flights originating in Europe and also to several Asian partner itineraries and also to awards booked on V Australia.

Now, I find that British Airways premium cabin award availability is so good, from so many US gateways, that I might be willing to swallow some extra charges. But when you pair multiple long haul flights in an itinerary, the costs really add up. Flying US – Europe – Africa roundtrip can run about $1000 in fuel surcharges per person. On an award ticket!

Fuel surcharges are one of the things undermining the value of the American Express Membership Rewards program. Membership Rewards lost Continental as a transfer partner, which hurt. But the real problem is that most of its remaining parters add fuel surcharges. Its Star Alliance transfer partners are Aeroplan, Singapore, and All Nippon – fuel surcharges all. British Airways means fuel surcharges. Air France/KLM Flying Blue incurs fuel surcharges. Delta does not… sometimes. Although Delta miles are often called SkyPesos for a reason.

Back to the original question, the same American Airlines flight will cost a pittance in taxes when redeemed with American AAdvantage miles but will cost almost as much as a paid ticket when redeeming with British Airways Avios. Which means using Avios points for that award isn’t a great idea.

For a US-based customer, Avios points should be used for:

  • Domestic short-haul non-stop awards on American or Alaska Airlines (no fuel surcharges, cheap award pricing)
  • Non-stop flights on American or LAN to South America (no fuel surcharges, reasonable award pricing)
  • Non-stop flights on British Airways to London or with connections inside the U.K. or to nearer Europe (fuel surcharges, but reasonable award pricing)

If you’re getting your BA miles from a 100,000 mile signup bonus with a Chase credit card, the points are still an absolute bonanza, you just have to use them carefully. What I wouldn’t do is focus on earning British Airways Avios instead of miles in other programs unless you’re a U.K.-based customer.

If your interest is coach awards, you want to avoid programs with fuel surcharges. American (except when redeeming British Airways), United, US Airways, Alaska Airlines (except when redeeming British Airways), Delta (except when they impose fuel surcharges) are where you should be looking.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel a topic he has covered since 2002. Co-founder of frequent flyer community Milepoint.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. […] That’s why it’s almost never worthwhile redeeming economy award tickets with mileage programs that hit their members with fuel surcharges. You still wind up paying much of the cost of a paid ticket, while spending miles rather than earning them. You don’t get all that much for the miles. (A couple of weeks ago I explained fuel surcharges on award tickets in some detail.) […]

Comments

  1. Another good use for Avios is domestic short-haul in Australia, where there are apparently no fuel surcharges (or they are small – I am flying several legs and the total taxes and fees for each leg only came to $15-$25 one-way).

    Also the LAN flights between SYD and AKL are a good value in miles and relatively lower fees (still has int’l taxes). Qantas on the same route has much higher fees though on an award booking.

  2. Gary,

    I appreciate the article and found it very informative. I was wondering if you had or knew where to find a comprehensive list of the different alliances and and their fuel surcharge/taxes policies. For instance if I wanted to use AA miles to fly to Asia. Does Cathy charge fuel surcharges? Thanks.

  3. “But it’s fairly standard to pay a couple hundred bucks in addition to miles when redeeming an award for international travel…” Yes, using Cathay seems to cost over $300 in charge for traveling from SFO to Asia…

  4. Even as a UK based customer, Avios are not great – and difficult to earn as most cheap BA fares do not earn miles. Better to stick with AA miles.

  5. I know you are mainly addressing the question about a surcharge to Europe, but Southwest should be added to the conclusion paragraph. No surcharges and straightforward redemptions, and a valuable partner of Ultimate Rewards.

  6. @NB – where are you flying on cheap BA fares that don’t earn miles?

    Since the bigger tie up with AA took place a while back, all Y fares, even the cheapest tickets earn 100% miles.

    Flying within Europe on cheap tickets generally doesn’t earn many miles as the distances are so short.

  7. Another minor sweetspot for Avios sre the British Airways flights within southern Africa, such as JNB-Windhoek. They are not charging fuel surcharges, and the distance based awards are less in points than a RT redeemed on another partner. It is 7500 Avios one way versus 12,500 on a partner airline.

  8. Any chance these fuel surcharges will ever go away or will it only get worse with more airlines adopting or modifying them? It sounds like such a scam, almost as if the passenger should believe the fuel charge will reduce if the price of fuel goes down.

  9. Charges vary wildly. Examples

    ORD-DPS all on CX in J $175 in charges
    LAX-SCL on LAN in J $5 in charges
    SFO-MLE on UA/OZ/SQ in J $88 in charges
    ORD-LHR on BA in J $750 in charges, didn’t book this decided on the other direction and took CX, great airline

  10. On coach rewards to Europe I wonder if it’s better to do pay with points for part of the ticket and log the EQMs. AMEX plat members get that rebate which bumps the redemption a little bit. No way it makes sense in business class.

    AMEX really needs to cut a US Air or American deal for MRs.

  11. I’d second the motion to add US or AA to MR!! AA probably isn’t likely due to their tie in with Citi (though one never knows)… US seems do-able so we’d have a decent *A opportunity.

  12. Can anyone provide a good, comprehensive chart showing which programs add fuel charges (and when/where/how much)? I’ve flown all over the world for the past 15 years on FF tickets, and have never paid a fuel charge AFAIK. This is a new angle to me, and I’d like to know about which airlines/programs to avoid as I have no intention of paying a $700 “surcharge” for an award ticket.

  13. Gary, there’s more to this onerous story.

    If you check, the fuel surcharge in dollars for a US based ticket is 30% higher than the fuel surcharge in pounds for a UK resident (after converting to $$). For the same flight (different direction).

    Also, because it’s so UK-centric, a fuel surcharge LAX–JNB (via LHR) RT is double the fuel surcharge of LHR – SYD.

    Throw in the taxes, and I paid $3200 for RT LAX-JNB (with a stopover in LHR) for two F tickets. Still not bad since I used a 2 for 1, but wow. And fuel surcharge was about $1200 of the $1600 each ticket.

  14. So BA now has a FF program that is attractive primarily to folks planning short-haul flights within the US (which BA does not fly) plus some within Europe.

    I wonder where this is appears in the current BA business plan and I also wonder why they gave away tons of miles in the Chase ramp-up two years ago to potential US based long haul flyers, only to show them the back door now. I booked an AA C award to Europe last month and the fees were: $15 (for two).

    My plan to burn off my Avios is all set. After that, it’s not Avios, it’s adios.

  15. BA Avios reward tickets to Ireland on partner Air Lingus (and on to Europe) have low YQ surcharges. ($95 each way).

  16. With all the talk about the Chase Sapphire (which I have and use). this article is good reason to go back to the old standard, the Starwood AMEX. It’s the best way to earn miles for AA, including the 25% bonus for each 20,000 points.

  17. IMO it’s very unlikely that YQ will go away, particularly for European airlines. You also have a number of Asian airlines charge YQ as well.

    Air Canada have begun charge YQ on award tickets where the partner airlines charge them and I think this will become a more common occurance.

    YQ on reward tickets has and will continue to be one reason why Y award redemptions do not make much sense if flying with European airlines, the majority of which charge YQ.

  18. Actually best use of UR is transfers either to UA, WN or Hyatt,according to your needs. All three are equally favorable.

  19. Used the Chase BA 100K point card. Did $30k spend to get the companion voucher. Paid $1600 for 2 biz class Tix from IAH-CDG. Worth every penny imo for that comfort & 50K pts per tix. Will gladly do again anyday.

  20. This is exactly why I never signed up for that phony 100,000 miles British Airways offer several months ago. I did the math and realized it just wasn’t worth it.

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