Surcharge and taxes

I know this has probably been discussed many times but does any body know how VS calculate and Justify! the fuel and insurance surcharge code YQ. I can understand the other government imposed charges but the fuel ??? ! ^)

The reason I question this is I have just looked to book two UC rewards to Dubai and the taxes and other charges were nearly £1K. So much for "free" flights. I then checked the YQ amount which was £319 based on a flight of 3,414 each way. (I would have thought the fuel in Dubai would be very cheap based on petrol prices there) Anyway I digress, and getting back to the point I checked the YQ to Montego Bay and it was the same despite this being 4,700 mile each way. Intrigued I then looked at SFO a distance of 5,350 and the YQ was £359 only £40 more despite being an increase 36% in mileage. Finally shouldn't this be part of the reward anyway otherwise all you are getting for your 80,000 miles is a seat on the plane at the departing airport.

I know this has probably been discussed many times but does any body know how VS calculate and Justify! the fuel and insurance surcharge code YQ. I can understand the other government imposed charges but the fuel ??? ! ^)

The reason I question this is I have just looked to book two UC rewards to Dubai and the taxes and other charges were nearly £1K. So much for "free" flights. I then checked the YQ amount which was £319 based on a flight of 3,414 each way. (I would have thought the fuel in Dubai would be very cheap based on petrol prices there) Anyway I digress, and getting back to the point I checked the YQ to Montego Bay and it was the same despite this being 4,700 mile each way. Intrigued I then looked at SFO a distance of 5,350 and the YQ was £359 only £40 more despite being an increase 36% in mileage. Finally shouldn't this be part of the reward anyway otherwise all you are getting for your 80,000 miles is a seat on the plane at the departing airport.

it's because they don't have to. It's the biggest unregulated scam in the airline industry currently. Hence more push with main airlines to promote their miles schemes... Pax become fixed with a scheme on vague hope of freebies, a "Temporary" surcharge amounting to high % of flight cost stays in place indefinitely.
They gain decent revenue off that reward at the same time keeping those pax from using their rivals.
Very surprised this practise hasn't been challenged or legislation put in place ( but given you'll pay tax on the surcharge amount...why would they???)

I do not believe they do justify it other than they charge it, because they can. ): ):

With the reward bookings, the t&cs state that you still have to pay the taxes and surcharges.. I doubt that the YQ surcharge has anything specifically to do with the price of fuel or the milleage travelled. It is simply the return amount that they need to see on the ticket - whether this is to cover the fuel or the extra bottles of whisky they need to load up on when I'm aboard is more or less irrelevent. Per SR in a recent email out to people he objects to 'stealth taxes' and APD increases.... isnt this "Operating Airline Fuel & Insurance Surcharge" just that from a VS point of view??

Unfortunately I think that the YQ surcharge is here to stay. !

Very surprised this practise hasn't been challenged or legislation put in place ( but given you'll pay tax on the surcharge amount...why would they???)

Not sure I follow you there Mr NH.

The only tax is the APD and that is a fixed £ amount and dosen't depend on any other element of the fare (unlike VAT for example)

Very surprised this practise hasn't been challenged or legislation put in place ( but given you'll pay tax on the surcharge amount...why would they???)

Not sure I follow you there Mr NH.

The only tax is the APD and that is a fixed £ amount and dosen't depend on any other element of the fare (unlike VAT for example)

Would VS not pay corporation tax on the extra income? Putting their accounts through necker island are they... 8D

I was bored and did some playing around with numbers.

A VS 744 travelling from LHR to LAX burns an estimated 37,611 gallons of fuel (based on burning 24,000lbs of fuel an hour x 10.5 hours, then dividing that by 6.7 - read on a forum a rough guide is 6.7lbs per gallon of fuel)

Jet Fuel seems to be around 2.80 per gallon - again this is rough and will vary location to location, amount hedged, bought by airlines in advance etc.

So 37,611 gallons of fuel costs around $105,313.

If the LAX flight is fully loaded, there should be 367 passengers (261 in Y, 62 in W and 44 in J) - someone check my numbers here please!

The fuel surcharge for the Y/W passengers is £239 or $371.52. For J passengers it is £359 or $558.01. So the fuel surcharge total for the full flight should be around $144,558.

A rough guide, and could be well out!

[preiffer]

Looks about right - and this is the "EXTRA" cost of inflated fuel that they're claiming - so the remaining ticket cost *should* include the standard cost of fuel anyway.

It's quite a little earner VS have going on there....

I was bored and did some playing around with numbers.

A VS 744 travelling from LHR to LAX burns an estimated 37,611 gallons of fuel (based on burning 24,000lbs of fuel an hour x 10.5 hours, then dividing that by 6.7 - read on a forum a rough guide is 6.7lbs per gallon of fuel)

Jet Fuel seems to be around 2.80 per gallon - again this is rough and will vary location to location, amount hedged, bought by airlines in advance etc.

So 37,611 gallons of fuel costs around $105,313.

If the LAX flight is fully loaded, there should be 367 passengers (261 in Y, 62 in W and 44 in J) - someone check my numbers here please!

The fuel surcharge for the Y/W passengers is £239 or $371.52. For J passengers it is £359 or $558.01. So the fuel surcharge total for the full flight should be around $144,558.

A rough guide, and could be well out!

So basically the ticket without the fuel surcharge merely allows you to sit on the plane. Perhaps a campaign for honesty in ticket pricing is called for can see that happening not

I have no doubt there is some tax advantage gained by airlines in the way their fares are structured.

The US Department of Trade has warned airlines this year that fuel surcharges must reflect actual running costs. Airlines have have been warned and I would expect some form of action to be taken at some point.

Somewhere in South America airlines were banned from charging a fuel surcharge. All the airlines did was reword their fuel surcharge to an "international charge". How long before this happens elsewhere?

[Nottingham Nick]

Q: Is it illegal for VS sales rep to quote all of the cash amount on a reward fare as "Taxes"???

I would say most definitely not! Has that been said in writing?
If it hasn't - it is easily denied, or a claim of a slip of the tongue n( n(

[mitchja]

The reason why VS (and other airlines) don't include the fuel surcharge in the base fare is because the fuel surcharges change very often and so it's easier just to update a few fuel surcharges which are then applied across the board rather than having to update every single published fare every time the fuel surcharge changes.

The reason why VS (and other airlines) don't include the fuel surcharge in the base fare is because the fuel surcharges change very often and so it's easier just to update a few fuel surcharges which are then applied across the board rather than having to update every single published fare every time the fuel surcharge changes.

Really?!? The base fares also adjust all the time based on how heavy the loads are, popularity of route, sales etc etc..

The fuel and insurance surcharges are recharged to people who have purchased tickets with miles, VS and other airlines would lose the ability to charge this extra YQ 'tax' if they folded it all into the base fare - by the current rules at least... why give up this extra 'temporary' source of income

No matter how it is packaged, the OVERALL fare reflects the price VS offer and customers are willing to pay.

I know for reward redemptions the surcharge approach is not pleasant,but when you book a ticket with VS the price you see at the start of the process is the price you pay (save for the CC shenanigans).

I do not believe there to be a tax advantage.

If VS were to absorb the surcharge into the base fare, I am pretty sure they would increase the miles needed for redemption.

I still believe that when VS are preparing their budgets for the reward system they should allow all costs to be absorbed into that calculation even if this affects the mileage required for a reward flight. I believe as a marketing tool people would ratherhave to use an extra 10,000 miles that be told tht their free reward flight in UC Will cost of £450. It's physiological that 20,000 miles for two people extra as opposed to £900 sond far more rewarding.

Calling the fuel surcharge a scam is not really right. There is nothing fraudulent about it. For people who just buy tickets and fly, it is pretty meaningless (unless you believe fares would fall if it were removed...). The sting in the tail hits the frequent flyer programmes -- the airlines have used the surcharge to generate extra revenue on reward bookings. It is sharp business practice (and it is miserable to see the devaluation in miles that it has caused), but I don't think it's a scam -- unfortunately it is just one of the rules of the game now.

I still believe that when VS are preparing their budgets for the reward system they should allow all costs to be absorbed into that calculation even if this affects the mileage required for a reward flight.

I think this would cause a very significant increase in the redemption price of flights, which would then have implications for the value of miles right across the whole scheme -- including implications for the deferred revenue represented by outstanding miles. I can see why the airlines prefer to grab the cash.

[preiffer]

Funnily enough - on the phone right now to upgrade a family member's flight from PE to Upper.

"There will just be the additional TAXES to pay on top of the miles".


Errrr... Taxes? No there won't... Liars.

Funnily enough - on the phone right now to upgrade a family member's flight from PE to Upper.

"There will just be the additional TAXES to pay on top of the miles"

I agree -- if agents are claiming they are taxes (and I've encountered this too), then that is clearly incorrect and then the word scam may be appropriate.

But in and of itself, the fuel surcharge is not a scam.