Japan Airlines and All Nippon Airways raised fuel surcharges to $400 on Wednesday. Jet fuel prices in Asia are falling. Read that again.
This is the airline industry's version of your cable company raising rates because they invested in infrastructure three years ago that you already paid for twice. The logic holds together if you sustained a head injury.
Fuel goes down. Surcharges go up. It's not a glitch in the matrix. It's a business model. Airlines spent decades convincing regulators that fuel surcharges need to be separate line items because fuel costs are so volatile and unpredictable. Then they discovered they could just leave the surcharges high when prices drop. Turns out nobody checks.
Some analyst will explain this with a twelve-minute dissertation about hedging contracts and forward pricing mechanisms and how airlines lock in fuel costs months in advance. He'll use the word tranche. He'll reference basis points. He'll make it sound like thermodynamics.
Here's the actual explanation: they can.
The surcharge will end when it ends. The airlines will announce it with a press release about their commitment to passenger value and operational transparency. They'll time it perfectly with the next earnings call. Some guy who paid $400 extra in July will read about the reduction in December and feel like he participated in the free market.
Japan Airlines stock is up 3% this month, which means someone looked at this pricing strategy and thought "finally, a company that understands its customers can't do math."
Leave a Comment