Energy

Reversible surcharges


To cope with the sudden rise in oil prices, the air transport industry rapidly implemented a system of fuel surcharges.

This movement, initiated by American carriers in early 2004, spread to Europe the following spring.  Air France first applied it in May 2004.

The system is based on the one which has already existed in cargo for many years: each surcharge corresponds to a certain threshold, fixed according to the price of a barrel of oil.  If the price of a  barrel is stabilized below this threshold over a period of time, the surcharge is cancelled.  This system is preferable to raising fares as it is a more transparent process.  Its reversibility has been clearly proved, as have the conditions in which it applies.

If you take Air France as an example, the increase in the average cost of fuel per passenger and per segment, is in fact considerable: on the Asia-Pacific route, for example, it went from 98 euros (for the period from April to August 2003) to 165 euros (April to August 2005), i.e. an increase of over 68%. Air France is particularly susceptible, as it has a substantial long-haul network, where the amount of fuel used weighs heavily on operating costs.