WASHINGTON – U.S. Senator Robert Menendez (D-NJ) is increasing the pressure on airlines regarding fuel surcharges that remain in place despite drastically lower jet fuel prices. Today, he called on U.S. Transportation Secretary Mary Peters to investigate why there does not appear to be a strong correlation between fuel surcharges and actual fuel costs and whether consumers searching for a ticket online are being giving full and accurate information about the total fares they will pay.

Senator Menendez wrote: “We were told repeatedly how these surcharges were simply a necessity in light of sky high fuel prices. But the situation with regard to oil and fuel prices has changed dramatically.... And yet most fuel surcharges are as high as ever, demonstrating that these ‘fuel surcharges’ are not determined by the price of fuel.”

Regarding transparency in online airfares, Senator Menendez wrote: “The myriad of fees that the airlines now charge often make it difficult or even impossible for consumers to find the best deal.  Depending on the airline, travelers are charged varying fees for the first bag they check, the second bag they check, for selecting a seat assignment, for having a snack, for checking bags curbside, or for changing a flight.... The flying public expects to be able to go to their computer and simply and easily compare ticket prices, but as it stands, that is simply impossible.”

The spot price for Kerosene-Type Jet Fuel in New York Harbor – a major jet fuel price indicator – has fallen from $4.34 per gallon in early July to $2.11 per gallon this past Tuesday, the most recent spot price available from the Energy Information Administration (http://tonto.eia.doe.gov/dnav/pet/hist/rjetnyhd.htm).

On October 20, Senator Menendez wrote the CEOs of 11 major U.S. airlines, urging them to roll back surcharges and extra fees and to make the fares more transparent (http://menendez.senate.gov/newsroom/record.cfm?id=304436&). As of today, only one airline, Southwest Airlines, has responded.

PDF of letter to Secretary Peters: http://menendez.senate.gov/pdf/103108DOTSurcharges.pdf

Text of letter:

October 31, 2008

The Honorable Mary Peters
Department of Transportation
1200 New Jersey Avenue SE
Washington, DC 20590

Dear Secretary Peters:

I am writing in regard to potentially deceptive fees and surcharges airlines have been charging passengers.  I ask that you use your authority under 49 U.S.C. § 41712 to investigate these practices and issue clearer guidelines so that passengers can more easily compare ticket prices between carriers and are not surprised by hidden fees. There are two practices in particular that that I find particularly troublesome. 

First, I understood why the airlines found it necessary to put large fuel surcharges in place when oil was close to $150 per barrel in June and July. We were told repeatedly how these surcharges were simply a necessity in light of sky high fuel prices. But the situation with regard to oil and fuel prices has changed dramatically.  Between July 2nd and last week, the spot price of Kerosene-Type Jet Fuel in the United States fell by over $2.00 (46 percent), to its lowest level in a year.  And yet most fuel surcharges are as high as ever, demonstrating that these “fuel surcharges” are not determined by the price of fuel.  Moreover, these surcharges appear to be only loosely correlated with how much fuel is actually used during a flight, being instead controlled by factors such as whether one flies economy, business, or first class, how far in advance one buys a ticket, and the amount of competition on a given route.  I ask the Department of Transportation to investigate whether these “fuel surcharges” have any basis in reality, or if they are being used to mislead travelers, reduce competition, and covertly increase fares. 

Second, the myriad of fees that the airlines now charge often make it difficult or even impossible for consumers to find the best deal.  Depending on the airline, travelers are charged varying fees for the first bag they check, the second bag they check, for selecting a seat assignment, for having a snack, for checking bags curbside, or for changing a flight. 

I hope airlines are in compliance with your May 19, 2008 guidance on the disclosure of checked baggage fees, but this requirement to just post fees on an airline’s website is simply not good enough.  My staff has gone to several airline websites and attempted to figure out what fees they are being charged and often what pops up is a dollar figure said to represent “taxes and fees” without any way to figure out to what specific fees or taxes these charges correspond. 

United Airlines, for instance, explains that fees and taxes may include a “Carrier-imposed fuel surcharges (YQ) of up to $250 per direction of travel,” but does not breakdown the charges on any given fare.

Even in cases where it is possible to tease out some of these fees, air travelers are often left to decipher tables of hidden fees.  The attached table shows how difficult it is for a consumer to figure out just what they will wind up paying for their flight.

The flying public expects to be able to go to their computer and simply and easily compare ticket prices, but as it stands, that is simply impossible.  I ask that you use your authority under 49 U.S.C. § 41712 to better regulate the airlines so that travelers are not victimized by misleading fuel surcharges or by hidden fees. 

Specifically I ask that you:

•    investigate to determine whether “fuel surcharges” actually have anything to do with fuel use or fuel costs; and
o    if there is little or no correlation I ask that you issue guidelines to ensure there is a strong correlation, because airlines should not be able to use a surcharge structure in an attempt to hide the true price of a ticket from customers or mislead them into thinking fuel costs are unrealistically high.

•    investigate whether customers can determine the exact breakdown of fees, taxes, and surcharges, and whether they can do this without inputting any information like their name, address, or credit card number; and
o    if customers cannot readily access this information I ask that you issue guidelines to require airlines to have these capabilities at their websites.  Customers should not have divulge personal information before determining the true cost of their airline ticket.

•    investigate the extent to which using “fuel surcharges” instead of increased base fares results in savings for the airlines by reducing taxes, increasing frequent flier revenues, or avoiding corporate or bundling discounts.

Thank you for your attention to this important matter.  I look forward to your prompt reply.



                                                                                Sincerely,




                                                                                ROBERT MENENDEZ
                                                                                United States Senator





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