While it does not come as a surprise in light of soaring fuel prices, we are seeing a spike in carrier imposed surcharges (formerly called “fuel surcharge”) on award tickets. The two latest additions–Virgin Atlantic and JetBlue–are particularly noteworthy.
Here Come The Award Ticket Surcharges…Again
For years, we’ve watched airlines play games with award pricing. Devaluations have largely come in the form of higher mileage costs, dynamic pricing, and reduced availability. But now, another lever is being pulled once again: surcharges. And like the recent increases in checked baggage costs (with JetBlue starting and every single U.S. carrier following), I expect these so-called “carrier imposed charges” will also be contagious.
JetBlue Adds Surcharges To United Airlines Redemptions
As flagged by One Mile At A Time, JetBlue has begun adding surcharges to award tickets booked on United Airlines, a troubling precedent because it effectively introduces cash co-pay of $200-260 one-way, even for economy class bookings. Not that United Airlines redemptions were ever particularly a great deal with JetBlue TrueBlue, but now the redemptions are laughably bad.
That’s a concern because if this comes to other programs, like Aeroplan, a much more mainstream and valuable currency will lose tremendous value overnight. We’ll explore the particular dynamics of the United-JetBlue relationship in a future post, but for now know that it is not going to make sense for you to use your JetBlue miles for travel on United.
Virgin Atlantic Hikes Surcharges On Award Redemptions
Meanwhile, Virgin Atlantic has also moved in the same direction, increasing fees on award tickets. Virgin has never been shy about imposing carrier-imposed surcharges and doing so without notice, but this marks a step devaluation in its Flying Club, which has variable mileage pricing which was supposed to account for changes in cost. Now mileage prices and surcharges are also inflated. Economy class was hit the worse, as flagged by Thrifty Traveler:
- Economy class from the United States to London increased from ~$111 to $164 one-way, up 50%
- Premium economy one-way to London increased from ~$240 to $298 one-way, up 25%
- Business class one-way to London increased from ~$586 to $701, up 20%
On flights originating in London, surcharges now approach nearly $1,000 in business class, tremendous increase from just a week ago.
Other Carriers Are Watching…
Cynically, airlines are rediscovering how lucrative “free” tickets can be (to be clear, there is no such thing as a free ticket and paying with miles is just a different currency than cash).
Speaking of surcharges more broadly, we’ve already seen several carriers hike prices. For example:
- Cathay Pacific recently increased fuel surcharges across its network
- Air France-KLM has introduced new longhaul surcharges
- Emirates continues to raise surcharges, including on award tickets
(there are many more examples)
British Airways has long been one of the worst offenders when it comes to surcharges. I expect we’ll see very hefty new surcharges on BA flights as soon as tomorrow, especially since Virgin Atlantic has already acted.
As we’ve seen over the last decade, if fuel prices do retreat, that does not mean these surcharges will necessarily be reduced. In fact, my prediction is that these surcharges are here to stay even if the situation in Iran stabilizes and oil drops down to pre-war levels.
Why? Because when everyone has done it, the airlines have cover to get away with it. It will take a brave carrier to reduce it and I don’t see any carrier who is willing to leave revenue on the table, especially as they try to compensate for the recent fuel shock.
CONCLUSION
JetBlue and Virgin Atlantic have added punitive new surcharges to award redemptions and they may just be the beginning. With fuel costs rising and airlines looking for new revenue streams, surcharges on award tickets are making a comeback (not that they ever fully went away). And as more carriers test the waters, don’t be surprised if this becomes the new norm.
If airlines realize they can charge you more both miles and cash…they will.
In theory, I have a lot of award travel coming up this year. I should probably book it sooner rather than later. You should too…
image: Virgin Atlantic
I’ve just been looking at some award pricing on Emirates from Europe to GRU, and the taxes and charges for business class were literally higher than the all-in fare with Avianca or Air Europa!
Crazy! (all-in business class?)
Yes! More than €1200 each way!
There used to be times when I would see DL’s Europe-origin mileage economy class tickets for Europe-US-Europe have higher fuel surcharge than the cheapest regular paid tickets on the exact same flights. I still sometimes find such situations with other mileage programs, and it’s always a big warning sign to me that the program is not trustworthy for consumers.
At some point, we’re just gonna stay home, wait this out, and return when things are sane again. Have had to do it before with pandemics, recessions, and personal crises. Bout time for another round it seems.
The dear airlines… If only they would try being a little more generous!
At this stage JetBlue needs to go away. Their ship is sinking and the longer they hang around the more damage they could do. Desperate airlines do desperate things but once one breaks thru a formerly glass ceiling the others quickly follow. I think B6 adding surcharges on UA awards is more significant than what VS are up to. They always had charges. Also the B6 charge is different in that it is not UA getting the fee, it is a B6 money grab
There’s no shortage of airlines which pass partner surcharges on to award redemptions- indeed VS have been doing that since the dawn of time when redeeming on AF, DL etc.
Trump did this.
Not directly, but this was entirely predictable as soon as he decided to start a war with Iran for no particular reason.
As the trend of increased surcharges spread yet again for tickets paid for with airline loyalty program points, note that this is a method by which airlines devalue the loyalty program points that customers have already accumulated and also lowers the value of the miles/points acquired in the future too. The greedy airlines in increasingly concentrated markets are oligopolies which do aim to maximize the fleecing of customers because that is what market concentration allows them to do when governmental authorities are whistling past the graveyard.
Agreed…
This is why I am very weary or airline cards – they are not shy of devaluing the currency or creating scarcity in awards – they have done it over and over and will do it again and again
I do not claim I have done the perfect math, and maybe there are some special offers that can make a deal too good to pass (leaving aside the cost to your credit score from more cards or many applications) – generally speaking I think a simple cash back card is best – at least you get your USD, Euro, etc. and can spend them on whatever you want (of course there can be inflation in currencies too – but at least many central banks are paid to keep it down – airlines CEOs ar enot paid to keep mile inflation dow they are rewarded for making it cheaper to run an aieline)