As this Op Ed is written, at the end of January, 2015, world oil prices continue under fifty dollars a barrel, less than half of the average price -- over $100 -- just six months ago, in mid-2014. That precipitous drop has caused a few carriers, such as Japan Air Lines and Qatar Airways, to decide to lower their fuel surcharges, which are a major portion of air fares -- indeed, sometimes the major component of those fares, over and above base ticket costs, particularly on international flights. For example, CNN reported that one typical major airline round-trip fare between New York and London is composed of a base ticket cost of $403 + a surcharge of $458, mainly fuel. The fuel surcharge costs more than the flight.
Something is drastically wrong here, from any reasonable economic perspective: think: GREED! This is the same kind of greed which has caused the airline on which I fly most often, Delta, to worsen its frequent flyer program -- over the strenuous objections of individual flyers -- by making its so-called rewards now depend primarily on money spent on tickets rather than on miles flown, as in the past. As a long-term Delta frequent flyer, I proposed early last year, when these changes were first announced -- a proposal made to their top executives and board of directors -- the implementation of an eminently-reasonable two-tier system in with both miles flown and money spent on tickets would count comparably towards frequent flyer rewards. Delta not only gave my proposal a total rejection -- they now even refuse to discuss the issue.
The arrogance of gouging flyers for fuel surcharges while fuel costs drop precipitously, and the arrogance of worsening long-standing frequent flyer rewards programs, are not greedy behaviors at Delta alone -- these consumer-adverse practices have spread far-and-wide throughout the U.S. airline industry's major carriers. Speaking as an economist, it is abundantly clear that more and more low-cost air carriers like Ryan Air and Virgin Atlantic will emerge to undercut the fare gougers. That is not at all in the long-term interest of Delta, United, American, and the others. It might well be said that fare is foul and foul is fare at these major carriers -- a Congressional investigation would be a good start towards removing those unjustified fuel surcharges. Such an investigation is badly needed NOW!
NOTE: An advance copy of this Op Ed was submitted to Delta top management and board of directors ten days ago, for their input, and in the interest of due process and fairness. That input has been exactly zero, which tells you quite a lot.