Airlines Doubling Fuel Surcharges for 2008 Due to Higher Fuel Costs

Between inflationary prices of fuel and the struggling economy with the consumer, airlines are being forced to double their fuel surcharges for 2008. For now, higher prices of fuel are the issue, more than a potential decrease of demand in flying by the consumer. Last year even though airlines struggled to keep from passing down their fuel cost to the consumer, there was a $20 fuel surcharge. So now airline fuel surcharges are being increased to $40-50 per round trip for domestic flights. The explanation for the aggressive fuel charge is that by being aggressive like this, they can feel more confident that there won't be any increased fuel charges this year.

I'm sure this might be the reason for the aggressive fuel charge increase. However, you have to ask yourself, with the slowdown in the consumer; have they factored in a consumer recession? Furthermore, what about the impact of the Euro for international travel? The high Euro which is trading near that $1.50 to the Dollar is already showing signs of a slow down of travel to continental Europe. Struggling airlines are already cutting back on the number of flights to conserve costs and create packed airplanes. Several airlines in the past year have already consolidated or have gone bankrupt. Whether further increased fuel charges will happen will be determined based on what the bottom line is on their earnings, which are continuing to show losses across the board for airlines. The longer the oil prices stay up in this $90-$100 per barrel range, the harder it is to keep from increasing air fares more. Many airlines have curtailed growth in order to concentrate on where they fly now instead of opening new markets, which is expensive and risky,

Furthermore, with the consumer slowing down, how will this help families traveling together if it is going to cost about $200 more for a family of four just to travel short domestic flights? Most likely they might consider driving versus flying depending on the length of time to travel. The only trump card to this is if the consumer is not slowing down as much as the media reports and fuel prices hold steady or come down.