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Air Canada adds fuel surcharges

BRENT JANG AND JEFF GRAY

Globe and Mail Update

Latest comment posted at 12:20 AM EDT 12/05/08

Tickets cost up to $60 more on some one-way flights in North America; WestJet mulling whether to follow suit ...Read the full article

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  1. W MacKay from Canada writes: Is there some reason Air Canada can't just raise its fares to accomodate higher fuel costs? What is the point of this separate fuel charge?
  2. G B from Calgary, Canada writes: I agree with W MacKay. I don't really want to know what makes up the price of a ticket. Just tell me the final price. Once more add on just complicates things.
  3. Yellow Submariner from Canada writes: Return Ticket, Winnipeg Toronto:

    Fare: $150

    Security Surcharge: $30

    Fuel Surcharge: $60

    Navigation Surcharge: $40

    Airport Surcharge: $25

    Checked Bag Surcharge: $30

    Nicer Seat Surcharge: $20

    Lunch Surcharge: $10

    Washroom Surcharge: $5

    Flight Attendant Surcharge: $20 if friendly one wanted, otherwise just $15

    Pilot Surcharge: $50

    Engine Overhaul Surcharge: $40

    Entertainment System Surcharge: $35

    Carry-On Bag Surcharge: $10
  4. spicydoc--That'll do, spicydoc, that'll do... from Canada writes:

    The one thing about the surcharge approach is that it can be adjusted.

    When oil returns to 80 bucks a barrel, they will drop the surcharge...

    .

    .

    .

    ....right?....
  5. Pretty Much Sane from Canada writes: I realize that not much can be done in the way of fuel charges, so people will have to act accordingly. This year's holiday is already booked but in the future (funerals excepted), we will be staying at home. A matter of economics. Having read the official oppositions "carbon tax" initiatives certainly won't phase me as it will be a hard sell and never fly. Mr. Dion can travel across the country this summer attempting to sell his theory to Canadians but somewhere along the line - "The buck stops here", this is not a good idea. Already there is controversy with NDP and the greens as to who is right/wrong. It's not going to get any better as time goes by.
  6. Mr. Criddle from Calgary, Canada writes: GB, the surcharge is Air Canada's way of saying "blame the big bad oil companies, not us" for the increase in fares. This way, Air Canada can say that they are offering the lowest fares possible, but that due to circumstances beyond their control (the profit gouging of big oil) they have had to implement a necessary albeit hopefully temporary fuel surcharge.

    Umm, those are their words, not mine, by the way.
  7. Dude Love from Toronto, Canada writes: The "Fuel Charge" is a scam. Any company that has a large cost component such as fuel would have long term contracts to supply fuel at a set cost and hedge with futures contracts. All the fees are just a way of charging what the cost of the flight acutally costs and airlines can turn around and advertise "low fares".
  8. Gary Dare from Portland, Oregon, Canada, writes: Dude Love writes, "Any company that has a large cost component such as fuel would have long term contracts to supply fuel at a set cost and hedge with futures contracts." Few airlines make use of that due to the large cash requirements to buy the fuel in advance (capitalizing the cost along the way). If Southwest was able to do it, why didn't everyone else ... AC, United, AA, etc.? The answer is that the legacy carriers are running with less of a float due to their higher costs (e.g., unions that restrict work rules, executives that loot the till) and cannot run large hedges, or even sell them in a cash crunch (done by Continental and American after 9/11).
  9. Eric B from Ottawa, Canada writes: To comment on Dude Love's hedging question, I would like to ask him how much he thinks hedging cost? If AC had bought oil (or fuel) futures contracts back when the price was low, I am pretty sure that they'd be just about all used up by now...and considering the price of oil today AND the future expectation of continued increase, the futures that need to be bought for next year are surely a hell of a lot more expensive then they were last round about...
  10. Larry Gemmel from Val-des-Monts, Québec, Canada writes: Fuel surcharges are false advertising, pure and simple. We have had to put up with this for international flights for some time, and now we are being subjected to this scam for domestic flights. Please, Air Canada, come clean and advertise your flights for the prices that we will have to pay. The excuse "everyone else is doing it" is the same excuse that shoplifters use. The airlines could take a lesson from Ultramar: The price I pay for gas is what I see on the sign, but my receipt provides a detailed breakdown of all the government taxes and surcharges that have their hand in the till. Disclosure yes! False advertising no!
  11. Lil Kross from Calgary, Canada writes: What surcharge will be added when we run out of oil? I would pay an additional fee for the airlines to figure out an alternative to oil. Fees can be justified when the cause is right so why not figure out how to minimize or eliminate oil on aircraft especially when leftover fuel is dumped into the air every time a plane prepares for landing. What a waste.
  12. Rosehill Avenue from Toronto, Canada writes: Dude Love from Toronto, Canada writes: The "Fuel Charge" is a scam. Any company that has a large cost component such as fuel would have long term contracts to supply fuel at a set cost and hedge with futures contracts. All the fees are just a way of charging what the cost of the flight acutally costs and airlines can turn around and advertise "low fares".
    -------------------------------------------------------------

    The reason the majority of airlines cant hedge a significant portion of their fuel expense (save southwest,jetblue and maybe westjet) is that hedging via buying forwards or futures requires substantial amount of cash to be posted as collateral. Airlines simply do not have the cash sitting around on the balance sheet to do so. Buying put options on fuel doesnt work well either as the expense (premium paid to do so) would be astronomical. Hedging isnt simply a matter of them going into the market, clicking away and voila, fuel is locked in at a certain price. Counter party risk is key with hedging contracts. And at the end of the day, with airlines going bankrupt left right and central, who in their right mind would want to be coutnerparty to an airline contract!? not me.....
  13. M Vatcher from Canada writes: lil kross, while i wouldn't argue that aviation is not a massive energy waster, aircraft only dump fuel in emergencies not "whenever" they land.
  14. Randal Oulton from Canada writes: >> Yellow Submariner from Canada writes:
    Return Ticket, Winnipeg Toronto:
    Fare: $150
    Security Surcharge: $30
    Fuel Surcharge: $60
    Navigation Surcharge: $40
    Airport Surcharge: $25
    Checked Bag Surcharge: $30
    Nicer Seat Surcharge: $20
    Lunch Surcharge: $10
    Washroom Surcharge: $5
    Flight Attendant Surcharge: $20 if friendly one wanted, otherwise just $15
    Pilot Surcharge: $50
    Engine Overhaul Surcharge: $40
    Entertainment System Surcharge: $35
    Carry-On Bag Surcharge: $10

    Hey, you forgot the five bucks for if you want water to flush the toilet after you're done.
  15. Free Thinker from Canada writes: Enjoy air travel while you still can. Oil production has peaked (Peak Oil) and will soon go into permanent and irreversible decline. Oil prices will eventually be so high that air travel will no longer be affordable to most people -- very likely this will happen within the next five years:

    http://www.youtube.com/watch?v=XNjZnRA2m68

    http://www.airliners.net/aviation-articles/read.main?id=81

    ===
  16. Dude Love from Toronto, Canada writes: No company or institution buys futures contracts full out. They are bought on margins. The other hedge is getting a contract to purchase at a set price, much like the contracts to from natural gas companies to lock-in the price of natural gas for a set amount over 3 to 5 years.
  17. Justin Campbell from Canada writes: With surcharges for everything, it's hard to understand exactly what the base price is buying. The only reason these costs are introduced as "additional charges", instead of merely being added to the base, is that the airlines can continue to advertise prices like "$150 to London, England" (when in fact it's closer to $850). If the government wasn't so busy bickering, they would be able to pass some legislation forbidding such obvious misinformation as advertised airline ticket prices.
  18. Ed Long from Canada writes: With oil at $126.01USD today, the need is obvious. And most transportation companies have a seperate surcharge that varies with the market.

    Dude - WestJet hedged fuel when they started up and were able to have a significant cost advantage over AC, who did not hedge fuel, until the hedge contract ran out.

    Gary Dare is correct. We were talking $20USD/ barrel back then and I believe WestJet hedged in the $17-18 range when oil started its long climb. A hedge contract in the last year would require large amounts of cash .... which most airlines no longer carry. Also, AC and other legacy carriers are flying multiple international routes dependent upon various suppliers.
  19. R L from Canada writes: They list "surcharge" separately because they want the price to look cheaper, then they add on extra fees. Oh but it's not their fault, it's just fuel? What a joke. That's part of the cost, so include it in the price.

    It's like certain car companies where the base price and the actual price for a decent model differs by $10 thousand. Other car companies have everything included, so you see the real price.
  20. Dick Dupa from Toronto, Canada writes: Do not drive or fly nowhere, so I do not give a s...
    Food prices are concern though.
  21. Miguel Sanchez from Canada writes: The only reason WestJet is 'studying it' is so they aren't accused of adding the surcharge first. Appearances are everything, dontcha know.
  22. ray say from Canada writes: Just a little something to mull over:

    1. Governments in Canada (and worldwide too I suspect) make money from commercial airline operations over and above the costs of services they provide to the airlines.

    2. Canadian airport authorities in Canada at least break even on the services they provide commercial airlines.

    3. Aircraft leasing companies make money leasing aircraft to commercial airlines.

    4. Fuel providers make money fuelling Canadian airline operators.

    5. Airline catering services make money catering meals to airlines.

    6. Travel agents make money servicing commercial airline customers in Canada.

    7. And on and on the list goes.

    8. And while my statistics may be slightly out of date, I doubt that the commercial airline passenger pays much more today in real terms than they did 40 years ago to travel by air in Canada. I also remember seeing a study in the '90's that concluded that taken together Canadian commercial airlines had lost money from airline operations cumulatively since their inception, and that any profits they made came from sale of assets and other non operational sources.

    The airline business demands enormous capital, and rewards low labour costs and often risky technical innovation. Airline investors have not on the whole ever done well in the airline business. Yet it attracts investors because in good economic times airlines appear at least to generate large cash flows, the barriers to entry are not very great, and route and market expansion is relatively easy. In difficult or bad economic times the cash flows often dry up sooner and faster for airlines than other businesses and costs are often discouragingly hard to reduce.

    Oh and 1 to 6 above keep on making money. So look carefully at the what the 'surcharges' really are, and which modes of transport in Canada (and the US for that matter) pay their way without taxpayer subsidy.

  23. Free Thinker from Canada writes: Lil Kross says: What surcharge will be added when we run out of oil?

    Very few people realize that we are going to "run out of oil". We have already reached the peak of world oil production and soon oil production will begin to fall -- this will cause oil prices to skyrocket as never before.

    But there is no energy source with anywhere near the energy density (energy per unit volume) of oil. Oil (kerosene) is the only energy source which is practical to power aircraft. Once oil climbs above $200 or $300 a barrel, commercial aviation will essentially cease. Airbus and Boeing will shrink dramatically or cease to exist.

    http://www.airliners.net/aviation-articles/read.main?id=81

    Wake up ! Peak Oil is here. The world as we know it is going to change dramatically as oil prices rise into the stratosphere in the coming years.

    ===
  24. Gary Dare from Portland, Oregon, Canada, writes: Eric B writes, "If AC had bought oil (or fuel) futures contracts back when the price was low, I am pretty sure that they'd be just about all used up by now..." In fact, that's what's happening at Southwest and has been a factor in loosening the lid on US airfares along its routes, much to the relief of the legacy carriers. All of the US carriers need to raise their fares instead of hope for future payoffs, the future is now ... even the head of Southwest said so, yesterday!

    http://www.usatoday.com/travel/
  25. Spring is finally here! from Canada writes: Just an interesting side note:

    Oil this time last year was $62.00 a barrel....
  26. Globe Insider subscriber content
    Ernie Tailgate from Lethbridge, Canada writes: There is an alternative to jet engines Lil Kross from Calgary, it's called a glider. Hey, when we run out of oil and we can't fly fighter jets perhaps we'll have peace in the world
  27. Allan Simonson from Canada writes: I'm going to school you folks on fuel surcharges:

    I've been dealing with them for about 4 years now, I'm in the transportation industry(trucking to be specific).

    The fuel surcharge allows a company to keep rates stable, and allow longer term contracts. If we couldn't do this, rates would actually be much much higher, to reflect the "risk" that we're taking by using a flat rate.

    In other words, it actually saves the consumer money as long as it is calculated honestly. There are some that will gouge.

    Another thing, fuel surcharge doesn't actually represent the cost of fuel. It represents the increased cost of fuel. They're still paying for some of the fuel out of the regular fare, but that part remains stable because the fuel surcharge takes care of any increases or decreases.
  28. Gold Standard from Canada writes: Spicy Doc

    Oil is NOT going back to 80 dollars.

    ((( Free Thinker from Canada writes: Enjoy air travel while you still can. Oil production has peaked (Peak Oil) and will soon go into permanent and irreversible decline. Oil prices will eventually be so high that air travel will no longer be affordable to most people -- very likely this will happen within the next five years:

    http://www.youtube.com/watch?v=XNjZnRA2m68

    http://www.airliners.net/aviation-articles/read.main?id=81))))

    People still think the facts you are speaking of are conspiracy theories but they will be surprised when their own ignorance flies back at them.

    ((( Spring is finally here! from Canada writes: Just an interesting side note:

    Oil this time last year was $62.00 a barrel....)))

    Well thats the combined effect for inflation and the mear beginnings of peak oil. By 2012 do not be surprised if we are paying 200 to 300 per barrel thats for sure. The worst thing about it is that for the most part its NOT speculation.
  29. Allan Simonson from Canada writes: A few other things:

    In my industry, fuel surcharge is recalculated once a week based on DOE average.

    If the fuel surcharge wasn't on the bill, the fare would have to increase/decrease quite dramatically. I would prefer to have a break down of all the costs.
  30. Globe Insider subscriber content
    R. Carriere from Maritimes, Canada writes:

    As a company driven by profits, AC can do and choose any method of pricing they wish. Supply and demand economics.

    That said, we always have choices of either airlines, OR, deciding how we do business and leisure! Right?

    In terms of business, with the tools available today, yet realizing face-to-face is always important, why not investigate Video-Conferencing?
    Next best thing, vs. a Rah-rah- sales/marketing meeting at some southern resort destination.

    I have no probs. with AC changing ther mode of delivery--that only forces me towards better due diligence concerning expense allocation and decision......to look beyond AC, and make decisions to save money and force the issue.

    There are several other options out there, but the realities is that travel will cost more. Seek and you will find alternatives and options.

    No need to be "loyal" to an airline that calls itself "Air Canada!" Check out the majority shareholders and you may be surprised where their "Allegiance" comes from? The country called "Money!"
    .
  31. Stephen Green from North Saanich, BC, Canada writes: Looks like we need to support the railways for land transport, and large nuclear powered cruise ships for intercontinental transport, very soon.

    Air Canada = high cost = crappy service=don't use them.
  32. Gary Dare from Portland, Oregon, Canada, writes: ray say writes, "Just a little something to mull over: ..." Good points ... on 1 and 2, airport privatization is finally starting in the US as state and/or local governments are dealing with huge deficits (it isn't just their federal government) and rather than subsidizing their airports to "help with tourism", they're looking at them for new revenue streams. Chicago is privatizing Midway first, as a learner for the big kahuna O'Hare, and is in a new, second round of bidding after bigger, richer consortium offers started to appear when ADP (Aeroports de Paris) looked like the winner. You can bet that the winning bidders won't be running their airports out of a sense of charity.
  33. ken g from Canadian in Cuernavaca, Canada writes: I am sure glad that there competitive alternatives to air travel in Canada. Otherwise the consumer is just lining the pockets of the ACE boys!
  34. Fred Bloggs from Halifax, Canada writes: WJA has no hedges and it costs them 13.2 cents to move one seat one mile in the first quarter.

    AC has a small hedging program and it cost them 18.3 cents to move one seat one mile in the first quarter.

    That is why WJA is known in the industry as a LOW COST CARRIER. Any one can be a LOW FARE CARRIER. That's simply a matter of cutting fares.

    That's a huge cost differential. How would you like to run a business and have unit costs 38% higher than your only competitor. I can tell you that if you did, you'd want to make sure your unit revenues were 38% higher as well.

    If two flights leave at about the same time, I would imagine its pretty hard to convince people to pay 38% more for an identical airline seat. Just like it's pretty hard for Sunoco to get people to pay $1.38 a litre when everyone else is charging $1.00.
  35. joe blow from writes: There is a good reason why they list a low airfare, then add everything else on.
    The practice was started by the low cost airlines. When customers began increasingly too use the web to search for fares they would obviously click on the ones that had large headlines showing a ridiculously low price. Then came the extras when you checked out. Nobody would click on a $500 fare when other vendors showed $99. In order to get people to click on their site AC went the same route, show a low fare & add on.
    Fuel surcharges are fact of life with todays volatile oil market. According to there annual report, a $1 increase in a barrel of oil equal 15 MILLION to their annual cost. With oil rising $20/barrel in the last couple of weeks alone, that is 300 million more in cost- totally eliminating any profit for the last two years. If oil prices continue to skyrocket, expect to see more surcharges.
    As to the poster who claimed they dump unused fuel every landing, that is one of the most ignorant comments I have ever read. They shut down engines on taxi to try to save fuel. Any pilot who dumped "extra fuel" would be filling out EI forms.
    Disclaimer, I do own shares in the company (whether that is smart of not is a different argument).
  36. Globe Insider subscriber content
    L.B. MURRAY from !! from Canada writes: UNITED Airlines, AMERICAN Airlines, and a multitude of airlines are either re-adjusting their pricing policies a couple of times a week or adding fuel surcharges.

    Should you be looking for low-cost airlines, be aware that several of those have gone bankcrupt in the past 60 days.

    Those of you who wish Air Canada dead, you're either new canadian, non canadian or .... wishing to have United and American serve your small towns. Good luck with your small towns. Those giants have only one interest and that is running the most profitable routes. Moose Jaw and Nanaimo are not profitable.

    -
  37. Globe Insider subscriber content
    L.B. MURRAY from !! from Canada writes: joe blow writes : .....As to the poster who claimed they dump unused fuel every landing, that is one of the most ignorant comments I have ever read. They shut down engines on taxi to try to save fuel. Any pilot who dumped "extra fuel" would be filling out EI forms. .....

    ____________________________

    joe blow, I've seen even more ignorant comments in the past year on our Globe and Mail. Some days, our Globe and Mail sounds like the comments are posted from people just out of jail or juvenile court... mostly juvenile court, judging by the schoolyard bullying we see here every day...

    -
  38. Winston Smith from Canada writes: Air travel will soon be a lot more expensive. Better fly to far off places now as it is still affordable now.
  39. N N from Toronto, Canada writes: This is either a big rip-off or an example of a terribly run company. It is the latter if AC didn't bother completely hedging it's fuel costs last year. It is the former if they did hedge and then have the gall to pass on the savings from its hedging program.
  40. Prairie Boy from Canada writes: All the fares are one way. Wouldn't it save money if they brought the planes back? I'm pretty sure you can recycle them.
  41. Gary Dare from Portland, Oregon, Canada, writes: L. B. Murray writes, "Those of you who wish Air Canada dead, you're either new canadian, non canadian or .... wishing to have United and American serve your small towns. Good luck with your small towns. Those giants have only one interest and that is running the most profitable routes. Moose Jaw and Nanaimo are not profitable." Or, based on comments in previous air travel threads, at least not flow US domestic on an legacy carrier since 9/11. American carriers are cutting routes and even if Canada opened up its skies 100%, won't be coming up ... they're not just cutting routes to towns the size of Nanaimo and Moose Jaw ... American Airlines can now only afford to fly direct PDX-ORD twice daily during summer and winter holidays (no more in the "low season). So it's hard to imagine that they'd want to bring charity American Eagle flights between Saskatoon and Winnipeg (losing $15000 a pop).
  42. Ed Long from Canada writes: Hollis Harris, the CEO who turned around AC after its privatization and restructured Continental, said the the absolute minimum for scheduled and profitable jet airliner service was a market of 1,000,000.

    That was over fifteen years ago and I am sure the economies of scale have moved upwards.

    There are only three markets, maybe five, in Canada that an international carrier will have passing interest .... to feed their network.

    Saskatoon, Edmonton, Winnipeg, Halifax, St. John's and the really small centres are not profit beds.
  43. Globe Insider subscriber content
    L.B. MURRAY from !! from Canada writes: Gary Dare from Portland, Oregon, writes :
    ''...
    American Airlines can now only afford to fly direct PDX-ORD twice daily during summer and winter holidays (no more in the "low season). So it's hard to imagine that they'd want to bring charity American Eagle flights between Saskatoon and Winnipeg (losing $15000 a pop)....''
    _______________

    You' re absolutely right, Gary. Those people are crying for ''open skies'' are in for quite a shock... forget those cheap flights between Saskatoon, Winnipeg, St John's, anywhere... Meanwhile, it is sad to see all those rail lines abandoned and now turned into walking paths... sorry, not too many people could walk from Quebec City to Boston... While Europe has improved its rail systems non-stop, in Canada, where rail travel could be so useful... sorry, but a lot of rail lines have been abandoned .... gone forever...

    -
  44. Rain Couver from Canada writes: Don't do it WestJet! You are the only Canadian alternative to the horrifically overpriced Air Canada. If you do it, then many others will use American carriers.
  45. Bart Farquart from Canada writes: ---------------------------------------------------------------------------------------
    W MacKay from Canada writes: Is there some reason Air Canada can't just raise its fares to accomodate higher fuel costs? What is the point of this separate fuel charge?
    ----------------------------------------------------------------------------------------

    It is a tactic to jack the price on a buyer AFTER a buying decision is made. In this way they can advertise a lower price on a web or paper ad and charge a higher one once the sucker is almost in the net.
  46. Robert Dryburgh from Winnipeg, Canada writes: What's the difference? There are already loads of extra charges above the posted advertized fares, as others have pointed out. I guess they figure they will scare potential customers off if they showed the all inclusive fare that we all have to pay. They pattern this after the NDP's attempts to conceal the real cost.
  47. Regina Filange from Canada writes: Prices go up, but the service still sucks on Air Scammin' Ya.
  48. D K from Canada writes: " N N from Toronto, Canada writes: This is either a big rip-off or an example of a terribly run company. "

    Obviously you have not noticed the price of fuel dramatically increase.
  49. Comments closed, censored, deleted or made to disappear from Mini Bushland, Canada writes: How desperate one must be to even consider flying Air Canada!
  50. Harbinger from Out West from Canada writes: Time to explore lighter than air ships? Dirigibles? Kinda like a safer Hindenberg? No hydrogen please. Too pokey? Then leave earlier. What is old may be new again? Darn these cliches. Can't seem to be rid of them!
  51. Globe Insider subscriber content
    bill williams from Canada writes: -

    I don't understand the complaints.. Everyone in Canada loves to hate Air Canada, but they were still voted the best airline in North America last year against everyone's personal faves; it's just something Canadians do ... like thinking that the Leafs might have a chance at the Cup ... or loading a double double at Horton's.

    There are lots of reasons why the airlines go to fuel surcharges rather than hiking fares, but probably the most important one is that they don't want their competitive pricing options hijacked by a bunch of speculators in the petroleum futures market. And, very similarly, they don't want their balance sheet drenched in red ink because some nutbar launches a minor war in some particular part of the oil producing world.

    I will say one thing ... the sooner we start meaningful R and D on next generation renewable fuel sources (forget corn ethanol) the better I like it. And before all the experts wade in with their 'not possible; ain't gonna happen' BS, please google around and see what Airbus and Boeing have to say about it; they are keen/anxious (not to say scared out of their gourds), and are VERY keen to get the stakeholders engaged in real research initiatives.

    -

    -
  52. Pietro di Orleans from Ottawa, Canada writes: Airlines are becoming shadier and scuzzier than ever ... worse than unscrupulous used-car sheisters ... hiding fees (have they not added the fuel surcharges before ... do they ever come off ? Is this surcharge on surcharge !), advertizing one-way fares ... like people don't come back ? With all the hidden fees, you can take the advertized price ... do some 'rithmetics to multiply by 2, (assuming you're coming back) and when all the itzy-bitzy small print is factored in, you'd still end up paying another 50% over that. What they do is legal ... but what a shady business they peddle ! If they included all the exclusions in the price, that would make them honest ... but would it sell seats, they'd say ?
  53. Hoppy Camper from Canada writes: Haha! Seat sales eroding revenue. Those pesky passengers indeed.

    Allan, I think there's one big difference between truck transport and passenger flight in that I don't consider a round trip ticket to be a long term contract.

    There's been a lot of talk about hidden fees and stuff and to be honest, i don't get it. I'd like to meet someone who gets to the part where it says "$xxx.yy will be charged to your credit card" and simply forgets how to speak the language they chose at the start of the process.

    To them I say, keep my economy propped up!
  54. Johnny Canuck from Canada writes: It goes to show what a sham and a scam aero points are if these surcharges charges apply to people with points. The Government must force companies, that run points plans, to offere cash values for points. Otherise it's a quasi pryamid, organized crime, fiasco.
  55. Save our Planet from toronto, Canada writes: Why instead of consumer's paying these fuel surcharges don't Oil companies pay them instead? They are in effect getting this money through their windfall profits (billions of them) which could simply be used to cover these fuel surcharges. Instead of making executives rich in Calgary why doesn't the government fix this fake oil shortage and end their windfall profit taking?
  56. p y from Canada writes: OK

    A few things: Jet A fuel is over 2 bucks a liter and an airplane between Halifax and Toronto has over 10,000 liters on it, so at 2 bucks thats 20G in fuel alone now 100 people on board paying 100 bucks one way hmm thats 10G. Now obviously im not taking into consideration business class and whatnot say we call it 15G in oh wow they made a 5G loss. Use your heads and look at the whole picture. Air Canada lost money last quarter. Its not like they are making 11 billion dollar profit like Exxon Mobil. So as any genius can figure out when the costs go up for the supplier they go up for the buyer. Simple its called economics folks. Tell the banks to stop messing up to traders stop buying commodities and start buying financials, then you will see oil prices drop.
  57. Raymond P from Canada writes: How about a seat surcharge? Anyone wanting to sit is required to pay extra. Bathroom surcharge: limit one visit per passenger. Aircraft maintenance surcharge: if you want to fly on a plane that has regularly scheduled maintenance.

    Fuel is one cost among hundreds. Adding it instead of increasing ticket prices allows for better looking advertising.

    Coming to an ad near you: Toronto-Vancouver $1.00 (plus applicable fees in tiny writing). BS
  58. Stewart Pid from Canada writes: Save our planet from Torontostan .... you truly are a bear of little brain to quote from the Pooh bear.
    It is called capitalism my commie friend ... move to Russia or China if you don't like life in North America.
  59. rahim ladha from Montreal, Canada writes: Was there no fuel surcharge before? I can believe that, for an airline that charges 2 dollars for a pillow i am sure there was a surcharge to begin it..
  60. ah sails from Canada writes: All airline surcharges are crap, running an airline is no different than any other business and the federal government should crack down on their mis-leading adverts. Know your costs, price and sell your product, if your costs go up adjust your price accordingly and if the market will bear it, business will go on...can't stand Air Canada and refuse to fly them, terrible company from top down...long past time to have an open skies policy, bring on competition..the small markets will survive, if there's a buck to be made the airlines will serve them.
  61. Gary Dare from Portland, Oregon, Canada, writes: bill williams writes, "I don't understand the complaints.. Everyone in Canada loves to hate Air Canada, but they were still voted the best airline in North America last year against everyone's personal faves; it's just something Canadians do ..." Actually, AC consistently wins awards as best North American air carrier by the Business Travel Coalition's surveys. Few Canadians get to fly the Big Six (soon to be 5 or 4) US legacy carriers since 9/11 to realize how far things have fallen, that AC is merely the bet of a mediocre bunch. (There's my disclaimer to those who think that I'm an AC fan ... sure, but I'd take BA, AF, LH, Singapore or Cathay in a heartbeat if offered an alternative at the same price. And as far as FF plans go, I'm United Premier Executive and American Gold, my Aeroplan is for car rental and hotel points that are taxed in the US if going to a US carrier's plan!)

    A lot of my colleagues in Portland try to set up Star Alliance itineraries to Asia that avoid United connecting out of SFO or LAX (unless it's to Singapore or Cathay) but rather, connect at YVR to an AC trans-Pacific flight.

    Where are the LCC's like JetBlue, Frontier and Southwest? Not enough business travelers use them because of limited routes (JB only runs one flight per day to/from PDX).
  62. Gary Dare from Portland, Oregon, Canada, writes: Pietro di Orleans writes, "Airlines are becoming shadier and scuzzier than ever ... worse than unscrupulous used-car sheisters ..." Sir, that was patently offensive ... used car salespeople deserve an apology from you!
  63. Gary Dare from Portland, Oregon, Canada, writes: ah sails writes, "long past time to have an open skies policy, bring on competition..the small markets will survive, if there's a buck to be made the airlines will serve them." Please read earlier discussion before posting ... US air carriers are cutting their domestic capacity, on routes even bigger than Canadian small markets. There is no buck to be made.

    http://www.usatoday.com/travel/

    And no, Southwest does NOT fly between Lansing, MI and Appleton, WI so even with open skies (which Canada should do anyways on principle, nothing to lose), they won't be flying between Saskatoon and Winnipeg.
  64. Caddis Boy from United States writes: It is unfathomable that Air Canada did not make a hedge purchase or margin on jet fuel - I simply cannot believe that company as large as A/C, where the single largest expenditure is gas and they did not make a concious decision to buy and hedge when it was low. If they didn't, then this is precisely why they are bleeding money - their executives do not know how to run a business.

    The fuel they are using now was likely purchased a year or more ago which means they are passing on the charge to the customer so they can make the future hedge and/or margin. So really, we are paying for fuel that we may not ever use. So yes, as one posters put it, it keeps long-term fuel charges stable at the expense of the customer.

    Airlines make money - just not Air Canada because it is poorly run business and just like the auto industry it pays too much to its employees for too little in productivity and performance.

    Next time you are standing in line at a ticket booth (of which there are fewer due to kiosk) just look around and see how many agents are behind the counter and ask yourself, what are they really doing?

  65. B A from Toronto, Canada writes: Management makes difference in these kinds of situations. All airline companies should hedge against the risks of fuel price increases and get into derivatives. The way they treat to their customers (reflecting all the price increases in one way or another) is not the way to go. In this competitive business world, a sophisticated start up would come in and "kill" all these juggernauts in a very short period of time. The incumbents should be grateful that it's not financially easy to get into this business.
    Air Canada send your executive board members to an Executive MBA School and have them take Finance 101...
  66. Mac- GLG from Canada writes: My company buys delivery from brokers - driving the 18 wheeler's.
    We've been paying fuel surcharges for years.
    The invoice has your actual cost a "fuel surcharge"
    Some try to take a margin on it and others just co with their cost.
    The prices vary substantially so getting quotes is important.

    Airlines are no different
  67. Globe Insider subscriber content
    L.B. MURRAY from !! from Canada writes: Caddis Boy writes : Caddis Boy from United States writes: It is unfathomable that Air Canada did not make a hedge purchase or margin on jet fuel - I simply cannot believe that company as large as A/C, where the single largest expenditure is gas and they did not make a concious decision to buy and hedge when it was low....
    ____________________________________

    No hedge purchase or margin on jet fuel and even worse, Air Canada was expecting delivery of several new planes from BOEING and now, delivery is pushed back by two years... On these conversations, whenever Bombardier is mentioned, the bashers are out in droves, but not a word about BOEING...
    -
  68. Mikey Dee from Canada writes: Hey this is real life here....adjust to it! ....I now drive slower & smarter to conserve fuel and money. There's likely going to be a number of failures during this period of adjustment and when it's over, only the strongest will be left. Hunker down & ride it out....tory times are tough times
  69. B Johnson from Halifax, Canada writes: scAir Canada - just another nail in it's coffin. You forgot to add the surcharge for lost luggage = $100/pc.
  70. from the tree house from Kanata, Canada writes: On "Moose Jaw and Nanaimo":
    There is a price to pay when you live in "isolated" places. There is a benefit, too. So, just suck it up. Why should anyone else subsidize air travel for you?
    The same holds for Canada Post, etc. When people settled the far and away areas, they did not rely on subsidies. They settled there because the benefits for them overrode the drawbacks. This should be the ruling principle now, too.
  71. W_UP 2008 from Canada from Canada writes: bill williams from Canada says:I don't understand the complaints.. Everyone in Canada loves to hate Ai rCanada, but they were still voted the best airline in North America last.........................................So was Boeing two weeks later one of their planes went down. Seriously, awards, what does that mean? Many awards do not have substance today. I disagree with the surcharge that Air Canada is imposing. It seems whenever prices go up, it all falls on the consumer. How much can we take? The middle class is disappearing as the rich get richer. Cell phone bills are a scam as well. These Capitalist companies use their lawyers to find loop holes to make more money. That isn't ethical and the Government shouldn't allow it. But who's complaining anyway?
  72. T Rogers from Vanc, Canada writes: Let’s not forget the:

    Surcharge administration surcharge: $100
  73. Larry Coulter from Canada writes: As quickly as oil cimbs to the point that society can't afford it; an alternative will be developed. Not before. I suspect we'll get there soon. Meanwhile the useless governments in N. America will continue to muddle around on this topic. Of course we the people get to bear the brunt (as usual) in the interim.
  74. James Tee from Halifax, Canada writes: I imagine that adding the fuel surcharge on top (rather than just bumping up the base price of the fare) allows them to charge it to users who book reward flights with Aeroplan points...
  75. Looking At You From The Border from United States writes: I had to laugh reading some these posts. I didn't even know anyone in southern Ontario even bothered to fly a high priced Canadian airline. Judging from the the overflow of Ontario license plates in the parking lots, I just assumed they all flew out of Buffalo on JetBlue, Southwest or Airtran for well less than half the cost.
  76. Red-necked and loving it from Canada writes: Larry Coulter from Canada writes: As quickly as oil cimbs to the point that society can't afford it; an alternative will be developed.

    Yep, can just picture a giant Enercon windmill bolted on top of the fuselage powering those formerly fuel guzzling turbines. Just kidding, though I think alternatives (non carbon producing) are decades off. Coal to gas is, despite the Al Gore's, Suzuki's, Dion's of the world, going to be the stop-gap until something radically new can be invented, because "invented or discovered" it hasn't. It won't be ethanol and it won't be hydrogen, that's sure.
  77. Barry E. C. Boothman from Fredericton, writes: Add this latest surcharge to Air Canada's already grossly inflated prices. Fredericton to Toronto currently runs about $240 one-way. Toronto to Tampa $140. They have a monopoly in most locales in Atlantic Canada and the only places that avoid most of the consumer rip-off are cities like Halifax, which has a competitor firm.
  78. Gary Dare from Portland, Oregon, Canada, writes: Caddis Boy writes, "It is unfathomable that Air Canada did not make a hedge purchase or margin on jet fuel ..." Unfathomable? None of the Big Six US legacy carriers have significant fuel hedge positions, either. Only Southwest had significant fuel hedges at $40-60 bbl ... notice that I said "had" because those are running out and even their CEO just said that airfares must rise ...
  79. Gary Dare from Portland, Oregon, Canada, writes: Looking At You writes, "Judging from the the overflow of Ontario license plates in the parking lots, I just assumed they all flew out of Buffalo on JetBlue, Southwest or Airtran for well less than half the cost." That's assuming the limited routes of those LCC's work for them ... except for having to cross the border, that's not any different than people in Chicago abandoning legacy carriers at O'Hare for LCC's at Midway. The only problem is that now ... NOW ... not six months ago ... not last summer ... US airfares are rising quickly even for the LCC's. Looking at the bad financial results of the US carriers, the problem is that they weren't charging high enough fares (not that we'd complain but ...).

    http://www.usatoday.com/travel/
  80. B Fulsom from Menlo Park, United States writes: Westjet is reviewing what to do? Pretty simple: nothing.

    A $60 fuel surcharge on east-west Air Canada flights should wipe out any "seat sale" ACA could have put up to compete against them. I'm making a cross-country trip later this summer and with this fuel surcharge plus the second bag charge starting July 15, my ticket just went up $85. You can bet I'll be giving Westjet a serious look. And these extra fees give that much more incentive (on top of the ridiculous existing taxes, fees, and monopoly price) to fly any US carrier into Buffalo, bypassing ACA into Pearson completely.
  81. Crusty Curmudgeon from Ottawa, Canada writes: Correct me if I am wrong -- but don't the airlines have annual deals that stipulate the price of their fuel from their suppliers?

    This insulates them against jumps in fuel prices.

    Many municipalities have this -- why don't the airlines?

    If the next round of contracts with the fuel supplier indicates that the price is higher -- then they can raise the price of the tickets.

    From my point of view this surcharge stuff is crap.
  82. Luke R from toronto, Canada writes: and yet somehow the european lost cost carriers like ryanair, easyjet, air berlin are able to keep prices low on short haul travel. westjet claims to be canada's lost cost airline and yet their prices are more in line with air canada. as usual the p#ssies (er...people) of canada will just take it.
  83. Cardinal Richelieu from toronto, Canada writes: Remember their motto, "At Air Canada we are not happy until you are not happy"

    Next time this airline goes broke, which it will, let's leave it broke. Let Westjet and the U.S. carriers cover the North American market.
  84. Globe Insider subscriber content
    L.B. MURRAY from !! from Canada writes: Luke R from toronto, Canada writes: and yet somehow the european lost cost carriers like ryanair, easyjet, air berlin are able to keep prices low on short haul travel. .... ___________________________ Sorry, Luke R, but last week I was reading in a very serious newspaper that the easyjet, which by the way is based in France, was about to go ''belly up'' and ryanair could be next, unless they raise their prices by a very ''substantial'' amount... If you're travelling to Europe this summer, be very careful and look first at the Euro... just a few years ago at 80cents U.S. and now at somewhere $1.40 (haven't checked this week).... Best bet from London to Paris would be the Chunnel... If you're very wealthy or this is your first time in Europe... Oh well...For the wealthy there is the ''Orient Express'' or private jets or flying your very own private jet (since taking my first Flying Lesson, way back in the '60's, that was always my dream, flying from Paris to Vienna, to Venice, to Salzburg and back to Oxford or perhaps Edinburgh...) Oh well... I'm too old for that and too old for Youth Hostels which are great in Europe, in some places, especially in southern Germany and Austria, in the off-season.... So... I'll keep flying Air Canada where I've always received excellent service at the counter, on board, anywhere... of course, I always smile, say ''please'' ''s'il-vous-plait'' ''merci'' ''thank you''.... Carpe Diem
  85. Gary Dare from Portland, Oregon, Canada, writes: Luke R writes, "and yet somehow the european lost cost carriers like ryanair, easyjet, air berlin are able to keep prices low on short haul travel." EJ's CEO, Will Harris, admitted two weeks ago that their model is unsustainable. RyanAir is a la carte, you pay fees for everything and they're trying to find a proper pay toilet mechanism due to the difference in size between the Pound and Euro coins. Air Berlin is trying to sell itself to Swiss or Lufthansa or even LOT Polish or risk going under.
  86. Gary Dare from Portland, Oregon, Canada, writes: Barry E. C. Boothman writes, "Add this latest surcharge to Air Canada's already grossly inflated prices." Sure but at slightly lower prices, Continental and Northwest (who are merging) lost a combined $10.6 Billion last quarter. No typo, that's a "b" ... billions. United, US and American each lost around a quarter to a half billion. Only Southwest made money (JetBlue has been racking losin quarters since a year ago) but they're warning on tipping into the red as soon as next quarter because their fuel hedges are running out.
  87. Gary Dare from Portland, Oregon, Canada, writes: L. B. Murray writes, "Sorry, Luke R, but last week I was reading in a very serious newspaper that the easyjet ..." The problem is that many people are writing based on the situation a few weeks, months or a year ago and a LOT has changed. In fact, a lot has changed since this past Christmas ...

    By the way, I'd add to your warnings on Europe, a warning on Hawaii. The price of flying has gone up a lot with the closure of Aloha and ATA, United and Hawaiian have each added maybe one flight out of west coast connections. The tourism business on the islands is VERY worried about new high airfares choking it.
    • Posted 10/05/08 at 1:41 PM EDT |