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Fuel Surcharges
Old 11-14-2008, 09:20 AM   #1
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Fuel Surcharges

Cruise lines, airlines, shipping, small business, etc... Companies seem a little slow to remove the surcharges.

IMO - they should be removed as quickly as they were added.

There is a bit of industry collusion that goes on even if it is not formally negotiated between competitors.
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Old 11-14-2008, 09:55 AM   #2
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I received an email a few days ago from Air Asia, and they proudly announced that they had removed all fuel surcharges. Not only that, but they are selling 500,000 seats at $0.

So anyone planning on visiting Asia next summer - there are some great deals to be had!

I also read where Northwest Airlines has removed fuel surcharges from its award tickets. Now that some are starting, I'll bet we see an avalanche soon as competition kicks in.

Unless of course we nationalize the airlines, trains and bus companies too...
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Old 11-14-2008, 09:58 AM   #3
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Quote:
Originally Posted by chinaco View Post
Cruise lines, airlines, shipping, small business, etc... Companies seem a little slow to remove the surcharges.

IMO - they should be removed as quickly as they were added.

There is a bit of industry collusion that goes on even if it is not formally negotiated between competitors.

Most large users of fossil fuels such as airlines and cruise operators hedge most if not all of their exposure as opposed to buying it at spot.

Most of them are still paying inflated prices because of this.
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Old 11-14-2008, 10:08 AM   #4
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Originally Posted by saluki9 View Post
Most large users of fossil fuels such as airlines and cruise operators hedge most if not all of their exposure as opposed to buying it at spot.

Most of them are still paying inflated prices because of this.
I know. Unless they are gaming it... they would have kept surcharges off till those hedges exhausted. They apply the surcharge to their benefit (not as a factor to level things).

Fuel surcharges are a farce anyway. They should just raise or lower prices to reflect their costs.
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Old 11-14-2008, 10:11 AM   #5
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There was just something in the Atlanta newspaper about a local town that added $3.75 to traffic tickets for a fuel surcharge for their police! They decided to remove it today.....
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Old 11-14-2008, 10:46 AM   #6
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I know some of the airlines tried to hedge oil. They locked into some rate that is much higher than it is right now.
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Old 11-14-2008, 11:33 AM   #7
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Quote:
Originally Posted by chinaco View Post
Cruise lines, airlines, shipping, small business, etc... Companies seem a little slow to remove the surcharges.

IMO - they should be removed as quickly as they were added.

There is a bit of industry collusion that goes on even if it is not formally negotiated between competitors.
I simply do not understand why so many people are in such denial that most markets are relatively free markets.

Small businesses in collusion? It doesn't really make sense does it? In this slow economy, businesses are fighting for customers. If they can afford to attract more customers through a lower price, they will.

Occam's Razor.

Another thing I don't understand is comments like "they should be removed as quickly as they were added." What does that mean exactly - how would this happen? I think a company should be free to set any price they want, and customers should be free to vote with their wallets. And, except for oligopolies, we do. What's the problem?

And, what would be the "antidote"? Seems to me, if every company was going to raise and lower their surcharges in unison, *that* would entail collusion, no? Or, we could have the govt set fuel surcharges for each and every industry, including the guy that cuts my neighbors lawn. And monitor it to make sure they all comply with the law. Oh, and then they would need to apply some complex formula for those companies that bought fuel on contract. Is that efficient use of taxpayer money? Like the pencil story illustrated, free markets mostly handle all this on their own, quite well, thank you.

Seems the "solutions" are worse than the problem. Further - is there even a "problem". You gave your impression, and others countered with the opposite view that they were being dropped. So that is not even known.

-ERD50
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Old 11-14-2008, 02:04 PM   #8
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Originally Posted by ERD50 View Post
I simply do not understand why so many people are in such denial that most markets are relatively free markets.

Small businesses in collusion? It doesn't really make sense does it? In this slow economy, businesses are fighting for customers. If they can afford to attract more customers through a lower price, they will.

..
I mention small bus on surcharges... but they are not colluding... They are too fragmented. Although they will follow the competition.


Larger businesses with fewer competitors do not collude directly... obviously it is against the law. But they do watch each others signals. Very common for oligopolies setting prices. Surcharges are price increases... an explanation for price increase.
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Old 11-14-2008, 02:23 PM   #9
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years ago i read a story how it's common to raise prices in a recession to keep up earnings growth. except that back in 2001 either the makers of Huggies or Pampers raised prices and the other didn't follow. I think they even increased the size of the box resulting in a price cut.

in the end they gained market share at the expense of the other guy. I think Kimberly Clark was the one that lost out
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Old 11-14-2008, 04:21 PM   #10
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Originally Posted by chinaco View Post
Very common for oligopolies setting prices.
I agree that oligopolies can mess with pricing. That is not free market.

Sure, businesses can 'watch each others signals' - and consumers can look for the best value and buy it.

So.... can you answer any of the questions I put forth? Otherwise, it's not a money discussion at all,[MODERATOR EDIT]that the big, bad companies are taking advantage of us little guys. With that thinking, every company would be increasingly profitable all the time, because they have this amazing control over the consumer, when it actually works the other way most of the time.

So, my Q's repeated:
Quote:
"they should be removed as quickly as they were added." What does that mean exactly - how would this happen?

And, what would be the "antidote"?

Should we have the govt set fuel surcharges for each and every industry, .... and monitor it to make sure they all comply with the law? .... and apply some complex formula for those companies that bought fuel on contract?

Is that efficient use of taxpayer money?

Further - is there even a "problem"?
When fuel was rising, I remember hearing that a lot of companies were trying to resist adding or raising fuel surcharge, hoping that they could avoid it. How does that play into your observation?

-ERD50
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Old 11-14-2008, 05:55 PM   #11
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The fuel surcharges that Chicago cabbies charged, will be dropped to $0 tonight. It had been $1.00, but then lowered in October to 50˘. Because of the continued drop in gas prices, it automatically gets eliminated tonight! Good news for everyone who has to take the taxi in the ol' Windy!

Now if grocery prices would go down some due to lower fuel costs, I'd be even happier than I always am!
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Old 11-14-2008, 08:06 PM   #12
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To my knowledge, most cruise lines have dropped fuel surcharges to a certain extent. I think a few are doing some sort of phase out, such as keeping them thru 12/31/2008 (probably already have a futures contract for the fuel), then conditionally keeping them for 2009 sailings, but giving credit to spend on board if oil stays below a certain target price, then eliminating them completely for 2010 sailings.

If you look at 2008 base prices for those that still have fuel surcharges, they have obviously lowered the prices dramatically to stay competitive. Look at Norwegian, for example, charging just over $200 per person base price on many cruises in 2008. They want the boat full to allow maximum opportunity for buying $7 fruity drinks, $80 massages, $15 5x7 photos, and playing in their casinos.
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Old 11-15-2008, 04:46 AM   #13
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Originally Posted by ERD50 View Post
buy it.

So.... can you answer any of the questions I put forth? Otherwise, it's not a money discussion at all,[MODERATOR EDIT]that the big, bad companies are taking advantage of us little guys. With that thinking, every company would be increasingly profitable all the time, because they have this amazing control over the consumer, when it actually works the other way most of the time.

ERD... Martha removed my original post because it was... a bit blunt.

But I did not want to let you off so easily. So here is a more sanitized response.

What is with you anyway? I have noticed that you attempt to pick posts apart refuting them point by point (far too often). Just about everyone on the forum has a hot-button topic from time to time where they feel strongly and decide to weigh-in and have little debate. I don't mind that... But you switch into that mode regularly.

It is fine to state an alternate Point of View... but what gives with the confrontation and interrogation?

Look back at my original post... It was a fairly benign complaint about add-on pricing. Then look at your responses. They refute, interrogate, escalate... taking it to a point where you made a deriding comment not germane to the discussion. Unfortunately I took the bait and responded in kind.

Did it ever occur to you that others may view situations differently? And that those points of view might just have some validity? These are rhetorical questions... not fodder for additional debate.

Look... I don't mind a little debate from time to time. But if you cannot help yourself and must do it often... please put me on your ignore list, you will be doing me a favor.
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Old 11-15-2008, 09:39 AM   #14
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ERD... Martha removed my original post because it was... a bit blunt.

But I did not want to let you off so easily.
Chinaco, I'd be glad to respond, but after the post you put up (I got a copy before it was deleted), you need to show some good faith effort. I'm not going to waste my time to risk another response like that. And don't try to sugar-coat it, being blunt doesn't get a post deleted. I welcome 'blunt'.

I'll PM you the rest, I'm on thin ice here, as I was reminded once that we are not supposed to publicly discuss moderation actions, but I'm not really questioning the mods decisions or anything, so hopefully this is OK. But, I don't like it that the mod edit note on my post probably gives the impression to others that it was far, far worse than what is actually was. I'm not happy about leaving that impression hanging there w/o context.

Follow through on my PM, and I'll talk.

BTW, I don't use the ignore function. I am trying to learn from, share, and understand the people I inhabit this planet with, and putting my head in the sand does not help in that regard. That's just me, others should do what they think is best for them.

-ERD50
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Old 11-15-2008, 01:59 PM   #15
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Originally Posted by chinaco View Post
What is with you anyway? I have noticed that you attempt to pick posts apart refuting them point by point (far too often). Just about everyone on the forum has a hot-button topic from time to time where they feel strongly and decide to weigh-in and have little debate. I don't mind that... But you switch into that mode regularly.

It is fine to state an alternate Point of View... but what gives with the confrontation and interrogation?

Look back at my original post... It was a fairly benign complaint about add-on pricing. Then look at your responses. They refute, interrogate, escalate... taking it to a point where you made a deriding comment not germane to the discussion. Unfortunately I took the bait and responded in kind.
Well Chinaco, maybe you made the unsupported argument that "Cruise lines, airlines, shipping, small business, etc" are all colluding to impose fuel surcharges long after they are warranted. You did so without really providing any evidence of anything. ERD50 refuted this broad assertion. Why not discuss the merits for/against your assertion?

You can't just throw out some unsupported claims and not expect to be challenged on them, can you?
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Old 11-15-2008, 07:23 PM   #16
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Yeah, personally I sent ERD50 a thank you for the (IMHO) logical way he took the conspiracy theory apart. Not that I don't agree with Chinaco on a visceral level, but as a reformed conspiracy theorist I've learned to listen when people pooh-pooh the theory with facts and reason. I tend to react first with my emotions, but far prefer to deal with issues like this in a straight forward manner, and appreciate it when somebody counters the emotions. It helps me get my head together and think things out more reasonably.

Now, if the OP had responded with reasons for the various points that made sense to me,I'd have been happy to continue the discussion. I've noticed ERD50 does pick apart poorly thought out posts regularly, and I just assume he/she is a naturally contrary person. But having someone like this on the forum isn't a bad thing. Especially when emotions are running high, as they are now. It's better to deal with these issues from a stable platform. Again, JMHO.
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Old 11-16-2008, 07:57 AM   #17
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The wife and I were ready to take a week long cruise with Carnival during the coming holidays. I was surprised that she wanted to go since we have been on a few 7 day cruises with the same cruise line in the last few years and she said she was cruised out and couldn't see doing it again for a few more years. I found a very good price and she thought maybe the value was good enough to go again. I crunched all the numbers for cruise, port charges, tax, travel, parking, tips, boarding the animals, etc and was ready to take the plunge. However, when the rep told me about the additional fuel surcharge (after oil prices had already fallen so gas was around $2/gallon) I informed him that we were repeat customers from multiple cruises and also that fuel prices were down considerably from when the surcharge was initiated. Since he could not make any adjustments I thanked him for his time and cancelled. That was the proverbial straw. I don't play those games. They may possibly have lost a repeat customer.
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Old 11-16-2008, 09:14 AM   #18
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i own a lawn care company and raised prices from last year to this year by....gasp....$1 per cut, citing gas prices. We have not reversed action, nor do we plan on it.
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Old 11-16-2008, 02:14 PM   #19
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Raising your price is completely different from a fuel surcharge. If there is a line item on a bill for a surcharge, it should be removed since prices have dropped. If you choose to raise your prices in general, no problem. Your customers can either choose to pay your price or go elsewhere. A surcharge indicates a temporary cost being passed on to the customer. If they don't remove it though, the solution is the same. Vote with your feet.
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Old 11-16-2008, 02:59 PM   #20
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I am the purchsing agent for my Corp division. I deal w/ at least 12 different vendors each week. ALL are still imposing fuel surcharges. One states that they reevaluate the charge every week and adjust. They were slow to raise. I was paying $20+/weekly delivery in Aug. This week it is $10.xx and has been coming down weekly for at least 6-8 weeks. Wish I could buy more from this vendor but it is real special stuff and we only need 1 time/week.
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