Beware those hefty fuel surcharges, added by nearly all European and Asian airlines. You can’t pay for them with points, which devalues bonus point offers
Fuel surcharges are not a rewards issue when you’re paying money for flights — you earn as many points for the dollars spent on fuel as for the rest of the flight. But they become a serious consideration when you’re cashing in miles for free travel, because you can’t use points for the surcharges. You have to pay cash — sometimes hundreds of dollars’ worth.
One of the clearest examples of this comes from British Airways. The Chase British Airways Visa card has one of the most generous sign-up bonuses for would-be world travelers: 100,000 Avios points on offer through February. It appears at first to be a no-brainer: that’s usually enough points for two free round-trip coach tickets to Europe, just for taking on a credit card. U.S.-based passengers should look carefully before they leap, however. You can get a lot for those points, but not free flights to Europe.
First, earning those 100,000 points requires significant spending. You get 50,000 points after spending $1,000 in the first three months, the next 25,000 points after spending another $9,000 within the first year, and the last 25,000 points for spending another $10,000 in the first year. The first year’s annual fee is not waived, so you’re also paying $95 for those 100,000 points — which may leave you a little cranky when you realize they don’t go far toward international flights. There are ways to use British Airways points that make sense, but ironically, they are usually limited to U.S. domestic travel.
That’s because Avios points don’t cover fuel surcharges, and fuel surcharges make up the bulk of an international flight cost on British Airways. Here’s an example of just how expensive those surcharges can be: A round-trip flight on BA in February from Philadelphia to London’s Heathrow Airport appears on Expedia for $861.30 — in line with U.S.-based airlines. Examine fare details, however, and you’ll see the flight listed at only $184, while taxes and “airline fees” cost a whopping $677.30.
Hefty fuel surcharges are not peculiar to British Airways. Nearly all European and Asian airlines add fuel surcharges on international flights. With a few exceptions, U.S. airlines do not. (See chart for details.)
Expedia shows a similar flight from Philadelphia to Heathrow on US Airways for $849 — close to the BA fare, except US Airways’ is listed as $661 for the flight, with taxes and airline fees only $188. Fuel surcharges are not listed. US Airways and United are the two U.S.-based airlines that never add fuel surcharges on any flights.
But if the overall price for the London flights is similar on both BA and US Airways, why does it matter if one charges more for fuel than the other? That becomes clear when you book those flights using miles. US Airways charges fees for international and partner awards but, all told, it rarely costs more than a couple hundred dollars to redeem an international award flight. The US Airways ticket to London, when bought with points, is nearly $500 less than the BA option.
It used to be impossible to spot the BA fuel surcharges, but customer complaints and at least one class-action lawsuit have led to fuller disclosure. Search that flight to London on British Airways’ website today and a list of “highlights” appears, including “no hidden charges, all of our advertised prices include taxes, fees and charges.”
When you choose the cheapest economy-class ticket available, an itinerary appears with a price breakdown and a footnote: “The inclusive total of your ticket includes a fuel surcharge per flight levied by the carrier.” Click on “more details” and a window comes up explaining airline fuel surcharges and government taxes and fees. “British Airways applies a fuel surcharge on all flights to reflect the fluctuating price of worldwide oil,” the site states. “The surcharge is based on flight duration and applies to all passengers, including children and infants traveling on British Airways operated international and domestic services.” The Chase website says that all reward flights are subject to fuel surcharges, taxes and fees of approximately $650 per person in economy class.
‘Price of oil’? Hmm
Rewards experts say that “price of oil” justification is baloney. “Fuel surcharges don’t exist because of the cost of fuel or because of mileage tickets,” says Gary Leff, who blogs at View from the Wing. The practice evolved, he says, as a convenient way “for airlines to cheaply and quickly adjust prices across the board by adjusting their fuel surcharges. One change applies to every ticket sold on a route, rather than having to update every fare one by one.” Attracting loyalty members and profiting on miles redemption became a nice side benefit.
So, is the British Airways card’s 100,000-point bonus worth pursuing? Many miles aficionados say yes, but they’re usually big spenders. “It absolutely is a great deal,” Leff says. “You just have to understand how to use them.”
You get more value for your Avios redemption if you book premium award seats on international flights, for example. Fuel charges do not increase if you book business- or first-class fares. You can also use Avios points on partner airlines that don’t add fuel charges, including on U.S. carriers Alaska Airlines and American Airlines. The same goes for Germany’s Air Berlin and South America’s LAN. (Story continues below.)
|Which frequent flyer programs add fuel surcharges to award flights?|
|Airline awards programs||Surcharge amount (not including other fees & taxes)||Conditions for surcharges||Exceptions|
|Aeroplan||Air Canada + most Star Alliance airlines that add them||No fuel surcharges on Aeroplan award fares for partner airlines Scandinavian, TAM, United, US Airways|
|Alaska Airlines Mileage Plan||None for Alaska Airlines||N/A||Fuel surcharges applied to AAdvantage award fares for partner British Airways|
|American AAdvantage||None for American Airlines flights||N/A||Fuel surcharges applied to AAdvantage award fares on partner British Airways|
|British Airways Avios||Calculated per flight segment depending on distance – $438 from JFK-London. Use Avios calculator||All international flights||No fuel surcharges on Avios award fares on partner airlines that don’t charge them, including American, Alaska, Air Berlin, Aer Lingus, LAN|
|Cathay Pacific||$124.50 for flights between U.S. and Hong Kong||Fares redeemed with Cathay Pacific or BA Avios rewards||No fuel surcharge on Cathay Pacific if you redeem with AAdvantage miles|
|Delta SkyMiles||None on most Delta flights||Delta flights originating in Europe||Fuel surcharges applied to SkyMiles award fares on European & Asian partners that add fuel surcharges|
|LanPass||None||Fuel surcharges added on oneworld partner airlines that add fuel surcharges|
|United||None||No fuel surcharges on any award fares, including flights on partner airlines that add fuel surchages|
|US Airways||None||No fuel surcharges on any award fares, including flights on partner airlines that add fuel surchages|
|Virgin Australia||All international flights||No fuel surcharges if booked using Delta SkyMiles|
Fuel surcharges are slowly leaking into North America. Canadian rewards program Aeroplan tacks them onto most flights now. American Airlines doesn’t add them to its own international award flights, but if you use AAdvantage miles to book a flight on partner British Airways, you’ll get fuel-surcharged.
How long before U.S. carriers adopt the fuel surcharge on their own flights? Leff believes the merger of US Airways and American Airlines will buy us a few years. “Both programs are due to make some big changes in their awards programs, but the last thing they want to do at the beginning of a merger is alienate their frequent flyers,” Leff says. “They’re going to put off any big changes they might have made — and if they’re not going to make changes, United won’t either. I don’t see this sweeping the U.S. immediately, but I wouldn’t make a bet on what happens five years from now.”