Rising airline surcharges are increasing the cost of corporate air travel, with businesses finding that negotiated discounts often do not extend to some of the additional fees attached to air tickets.
The increase has been linked to higher jet fuel costs, with some airlines choosing to adjust carrier-imposed surcharges rather than increase base fares. The charges, commonly shown as YQ and YR on ticket breakdowns, are controlled by airlines and can include fuel-related and other operating costs. They are more common on international itineraries and generally rise with cabin class.
For corporate travel programmes, the issue is that negotiated discounts may apply to the base fare but not to these surcharges. As the additional charges account for a larger share of the overall ticket price, the effective discount on the final fare becomes smaller.
On some business-class itineraries, the surcharges have accounted for between 21 percent and 41 percent of the total ticket price, according to examples cited in the report. On a sample route between Houston and London, combined YQ and YR charges increased from $2,155 at the end of February to $2,805 by mid-April. On another sample fare to Bangalore, the surcharges represented 41 percent of the ticket price.
The increase is also complicating travel budgeting. Volatile surcharge levels make it harder for companies to forecast air expenditure and assess whether negotiated airline agreements are delivering the expected savings. Because the charges can change independently of the base fare, the final ticket price can move even where the underlying corporate discount remains unchanged.
The impact is particularly significant on long-haul and premium-cabin travel, where surcharges can represent a substantial portion of the total fare. International business-class tickets are therefore becoming more exposed to movements in airline-imposed fees, adding another variable for companies managing travel budgets.
Whether the charges will fall as fuel costs ease remains uncertain in timing. Industry sources cited in the report said surcharges generally decline after cost pressures ease, but reductions can take time. This creates a potential period in which airlines continue to collect higher surcharges even after some of the underlying cost pressure has moderated.
For travel buyers, the changing pricing environment is increasing attention on advance booking, fare comparisons and air-ticket reshopping. Some corporate programmes are using reshopping tools to identify lower-priced alternatives after an initial booking, while others are directing travellers towards airlines or fare options offering more competitive inventory.
The development also highlights the importance of looking beyond the headline fare or negotiated discount when assessing the cost of corporate air travel. As carrier-imposed charges form a larger part of the final ticket, the total payable amount—and how each component is treated under corporate agreements—becomes increasingly important for travel managers and businesses.
Source : https: businesstravelnews.com
