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Reading on the web about the "Fuel Dumping" trick made me aware of the fuel surcharge, one of several possible charges being added to the base price of a flight. In order to understand the trick better, I would like to know:

What exactly is the fuel surcharge? Is it mandated by law? Is it just a trick that airlines use to keep the base price low?

The screenshot below shows details about what is added to the base price of a Lufthansa ticket DRS - MUC in June 2013. Note the Fuel and Security Surcharge.

Example of taxes, fess & carrier charges (per person)

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Fuel Surcharge is the cost that airline passes to the consumer if it's fuel hedging is insufficient to offset the costs of fuel.

Although more often then not it's a marketing tool for artificially keeping the fares low but not being "in the red" and since there is no regulation on the fuel surcharges the airlines are generally free to charge anything they like.

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The article you linked to mentioned: "This rate is calculated using the DOE (Dept. of Energy) website. That gives national averages." That makes me wonder: Is there regulation on how airlines have to calculate the fuel surcharge? Or can they just name any amount they like? – feklee Jun 10 '13 at 18:12
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@feklee There is generally no regulation on how these fees are calculated. But it's usually a good idea to have similar fees for similar flights. The article is specific for trucking companies but gives a general idea. There is no regulation as far as fuel surcharge is concerned: layover.com/owneroperator/rexpert/1105.html – Karlson Jun 10 '13 at 18:19
    
-1 for the first paragraph, +1 for the second. It's purely a marketing tool, masquerading as a ways to compensate for temporary increases in fuel prices in between planned price changes. – jwenting Jun 11 '13 at 5:49
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@jwenting: and you know that... how? – Michael Borgwardt Jun 11 '13 at 11:01

According to the article about Fuel Dumping on Hack My Trip:

Some airlines still include fuel surcharges in the base fare, and others may break them out only for certain routes.

So not all airlines use them, which means it can't be mandated by law. And why would there be regulation about individual components of an end user price. There is regulation (at least in some countries) that forces airlines to show end users the total price including all charges, to prevent false advertising .

The blog further states:

I think a better explanation is that airlines can easily adjust the cost of a ticket by changing just the fuel surcharge that applies to many routes between two regions without adjusting the base fare for each individual route as well as the dozen or so fare classes on each flight.

That's just some guy's theory, but it makes a lot of sense: basically the fuel surcharge is an administrative tool that simplifies the act of passing cost increases/decreases to the end user.

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A fuel surcharge is simply a mandatory fee charged by an airline, typically per-segment (per flight) and broken out of the actual fare for auto-pricing. For example, an airline may offer a fare from Seattle to Paris that is valid with multiple routings, e.g., SEA-LAX-LHR-CDG. The fare is published end-to-end (SEA-CDG), but the airline may impose a mandatory fee for each flight that is based on the flight distance or airports. E.g., the SEA-CDG fare might be $450, and they might impose a fuel surcharge of $500 for the LAX-LHR flight. Your actual cost (and the true fare) would then be $950 plus government taxes and fees. The airlines originally added fuel surcharges when the cost of fuel was going up rapidly and they didn't want to publish updated fares every day. These days, fuel is a fraction of what it cost then, but many airlines retain their high fuel surcharges.

Some airlines lump fuel surcharges in with taxes and government-imposed fees, but they are purely an airline-imposed charge that goes to the airline. One reason airlines love fuel surcharges is that they are technically not part of the fare. Many airlines have contracts with major companies and offer discounts which typically are calculated on the fare, so fuel surcharges are exempt. Also, airlines can pretend that the surcharge is a tax and thus you might blame "the government" for the high cost of the ticket.

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