More Airlines Tack on Fuel Surcharges

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The Associated Press (AP) reports that American and United/Continental have tacked fuel surcharges onto their fares. American's surcharges are as much as $5 each-way, and United/Continental's top out at $3. This comes just a week after JetBlue imposed a whopping $35 to $45 fuel surcharges on its Caribbean flights.

Airlines have been raising fares quite a bit during the past six weeks or so, but this marks the first time carriers have slapped fuel surcharges on domestic routes.

But with fuel prices rising quickly of late, airlines are scrambling to make up the difference. Prices are up 5.5 percent in the past month, and 33 percent in the past year. That's an extra $34 billion in fuel costs for the world's airlines.

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With prices projected to continue rising into 2011, passengers should expect the airlines to pass the costs along to them, either through fare hikes or fuel surcharges. In explaining its fuel surcharges during an earnings call last week, JetBlue said carriers should pass along those costs to the consumer. The airlines have built themselves a comfortable profit margin over the past few years, first by cutting capacity and now by raising fares as demand for seats comes back. If you think they're just going to forfeit the fruit of all that work, well, you are sorely mistaken.

At this point, the thing to watch is whether or not other airlines match. If Delta, US Airways, and Southwest join in on American and United/Continental's surcharge, then we'll have an official pattern on our hands. And if fuel prices keep shooting upward, look for that pattern to continue.

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