The Wall Street Journal is reporting that Delta is considering new moves when it comes to pricing in order to bolster their profits even more in the coming years.   Instead of another fee, this time it’ll be a surcharge.

A fuel surcharge, to be exact.  Delta wants to explore having fuel surcharges for both international and domestic trips.   It’s notable that Delta’s CEO Richard Anderson has plans to achieve a 10% profit margin for his company in the coming years which would be nearly unheard of. 

Fuel surcharges are in use in many other parts of the world today and they are used commonly in Europe.  It’s no surprise that many European airlines also earn a decent profit and did so even when the chips were down in their economies just a year ago.

But does that make it right?

Well, first of all, I think a 10% profit margin is actually unhealthy for the airline economy, at least in the United States.  It sounds rather reasonable but in most competitive marketplaces, a 10% profit margin for that kind of service isn’t really common. 

Second, companies tend to get addicted to fuel surcharges.  They are the airlines way of grabbing more money in lieu of getting more productive as times passes by.  A surcharge also levels the playing field among airlines and why should an airline who properly manages it fuel hedges not benefit more than airline who chooses to simply pass the penalty on to the passengers?

I think airlines would love to introduce fuel charges and I think if they could get away with it with respect to the FAA, they would all introduce surcharges instantly.  It would resemble the Great Baggage Fee rush we saw 2 years ago.  The problem is, this is just one more pricing complexity to be introduced for the consumer when it comes to choosing an airline flight. 

The typical consumer will have to find a price for a flight, weigh the option on baggage fees and then determine if the fuel surcharge raises the cost of that flight above an alternative flight.  Since an airline flight involves traveling from one place to another, I’ve got a better idea.

How about we start recognizing that some baggage is part of the bargain and how about we recognize that fuel prices (and their fluctuations) are also a part of running an airline business and get back to offering a *real* price for a trip instead of surprising consumers (and annoying them) on every trip?

Filed under: Airline News by ajax
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