Strategy

Two Airlines Cut Fuel Surcharges

Reacting to falling oil prices, Air France-KLM and El Al are the first carriers to rescind special fuel charges instituted earlier this year.
Stephen TaubSeptember 5, 2008

What goes up may just come down — even fuel surcharges.

A large number of energy guzzlers, from airlines and cruise companies to truckers to chemical companies, were quick to institute fuel surcharges as the price of oil surged earlier this year, topping out at more than $147 per barrel. Now that oil has plummeted to around $105, the big question is whether, and if so when, these same companies will rescind the surcharges.

Two international airlines are taking the lead. One, Air France-KLM, said Thursday it will soon cut its latest fuel surcharge due to the declining price of oil. According to the Associated Press, the carrier will cut ticket prices by as much as $20.22.

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Air France-KLM has instituted a number of surcharges over the past few years. Upon announcing the most recent one on July 8, it promised to withdraw it when the price of oil stabilized below $125 a barrel.

Meanwhile, El Al says it will cut its fuel surcharge for frequent flyers on certain routes by $40 to $100, according to IsraelNN.com.

Continental Airlines, on the other hand, has joined its domestic competitors and announced that it will now charge some coach customers $15 for the first checked bag.

A company spokeswoman told the AP the fee would help offset high fuel costs.