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British Airways in court in the US over fuel surcharges on Avios tickets

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An interesting court case is currently working its way through the US legal system. Four frequent flyers in the States are suing British Airways over the fairness (or not) of the fuel surcharges imposed on Avios reward tickets and corporate net fares.

The latest attempt by British Airways to have the case thrown out has just failed, and it will proceed to the next stage.

BA 747 retirement Concorde tail

See this Reuters story here for more details.

To quote:

In a decision made public on Friday, U.S. District Judge Raymond Dearie in Brooklyn, New York, said the plaintiffs offered sufficient support for their claims that the surcharges were not “reasonably related to or based upon” fuel costs. He did not rule on the merits of the case …..

The plaintiffs said British Airways saw the fuel surcharges as a means to boost revenue, and charge frequent flyers hundreds of dollars on each “free” reward ticket.

In letting the case proceed, Dearie cited a statistical analysis from the flyers that suggested that British Airways’ fuel surcharges from 2007 to 2012 “bore little relationship to – and were not based upon – changes in the price of fuel.”

There are a couple of points worth mentioning here. The first is that, for reasons unknown, British Airways charges higher fuel surcharges – substantially higher, in fact – for round-trip tickets which start in the US compared with the UK.

Heathrow to New York return in Club World has total taxes of £533. New York to Heathrow return has total taxes of £732. That won’t look good in court.

Secondly, I will leave you with this bit of data courtesy of my friend Andy.

Cost of fuelling a BA A380 to Los Angeles, return: $170,000 (figure comes directly from a BA pilot)

First Class fuel charge revenue: 14 x £359 = £5,026

Club World fuel charge revenue: 97 x £359 = £34,823

World Traveller Plus fuel charge revenue: 55 x £239 = £13,145

World Traveller fuel charge revenue: 303 x £239 = £72,417

Total fuel surcharge collected on a full A380 flight to Los Angeles: £125,411 = c $200,000

‘Profit’ generated by fuel surcharge vs the cost of fuel: c $30,000

The full court filings in the case can be downloaded from Loyalty Lobby here.

It is not clear where this case will end up – the worst case scenario, for BA, is that it is made to refund fuel surcharges to anyone who has flown to or from the US in recent years on an Avios ticket or corporate net fare (to which fuel surcharges are additional).

This would not be unparalleled – similar refunds were made a few years (I got one myself) when BA settled another court case.

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Comments (26)

  • James says:

    The only thing that I see coming out of this is the devaluation of an Avios point.

    Time to burn those points.

  • Ajay says:

    This is very interesting! Having travelled with the missus on 3 reward flights to the US with companion vouchers in 2009, 2011 and 2012 – a refund would be very welcome!!!

    • Paul says:

      I really hope BA lose this and simply wish there was similar legal routes open here in the UK.
      Avios being devalued is no argument against this and as we have seen from hotel dowgrading of their programmes not the end of the world.
      Of greater concern must be charging surcharges when the operating carrier has no such charge. That is deceptive if not theft.
      Annual x 4 redemptions since 2008 so a refund would be very welcome, even in part.

      • John says:

        Would BA be obliged to refund tickets bought in the UK and for travel returning to the UK?

        • Rob says:

          Depends how it falls. Really wouldn’t expect this to come off, though, unless BA has broken some odd US regulation on the legality of surcharges.

  • Lady London says:

    I’m betting the rest of the industry would be grateful if BA would settle this out of court.

    The precedent a loss for BA would set, might potentially open up many more claims on other airlines.

    Incidentally, I noticed a few months back that YQ seems to have been renamed something else, and is no longer called “fuel surcharge” on some BA fare quotes I obtained. Shortly after the first time I noticed this change I heard about this court case 🙂

  • wobbly wings says:

    We’ve debated this for years on FT. Fuel surcharges are a scam, nothing else. Fuel is an essential cost of flying airplanes and cannot be removed from the base cost and added on top. Fuel prices are relatively stable; so there is no temporary blip to compensate against. Even if there were, airlines could incorporate into the fares every time they file the fares. Surcharges mostly go up irrespective of their hedging and the underline price of fuel. All it is is a mechanism to force co-pay on awards and all sorts of discounted tickets and pay reduced commission on ticket sales. It’s time some regulator calls the bluff of the industry on this (it’s not only BA of course). Inevitably in the UK no one would take action, irrespective of how absurd it is and how many times this has been raised. It needs to be our friends over the Atlantic to take things forward.

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