US airlines not planning to cut fuel surcharges

[September 10, 2008]  FORT WORTH, Texas (AP) -- Although oil prices have dropped over the past few weeks, U.S. airlines have no immediate plans to reduce fuel surcharges that they tack on to the price of a ticket.

Most carriers have imposed several increases in their fuel surcharges -- they range up to $170 per round trip in the United States and more for international flights -- on top of fare hikes.

Fuel accounts for up to 40 percent of the budget at many of the biggest airlines, topping labor as their biggest single cost.

The price of oil slid Tuesday below $104 per barrel, its lowest closing price in five months.

U.S. airlines increased their fuel surcharges several times as oil roared past $100 a barrel and beyond, but they haven't reduced the fees as oil prices slid 30 percent since their mid-July peak.

On Monday, Singapore Airlines Ltd. said that it plans to cut its fuel surcharge by up to 10 percent. The carrier said the surcharge would fall to $36 from $40 for flights between Singapore and other cities in Southeast Asia, although it didn't announce any cut in surcharges on flights to the United States.

U.S. carriers, which other than Southwest all lost money in the first half of this year, said Tuesday it's too early to eliminate the surcharges.

"We've taken a look at it, but fuel prices are still well above what we budgeted for the year," said Michelle Aguayo-Shannon, a spokeswoman for Northwest Airlines Corp. "We're happy fuel prices have come down, but they're still not in a manageable area."

Tim Wagner, a spokesman for American Airlines, the nation's largest carrier, said fuel prices "remain very volatile despite short-term trends."

The spot price for Gulf Coast jet fuel has dropped 22 percent since its early-July peak. But Wagner noted that last week's closing price was still 48 percent higher than a year ago.

Airlines closely watch the fares and fees that competitors charge because they don't like to be priced higher. The result is that when one increases fares or fees, the others often go along.

"We always try to keep our surcharges competitive with the industry, so we'll monitor what those prices are," said Robin Urbanski, a spokeswoman for UAL Corp.'s United Airlines.

That suggests surcharges could fall in a hurry if one of the six so-called legacy airlines steps forward.

Dallas-based Southwest Airlines Co. doesn't have fuel surcharges. But Southwest is among the so-called low-cost carriers. Legacy carriers often waive the fuel surcharge on routes where they compete with Southwest.

[Associated Press; By DAVID KOENIG]

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