Menendez calls for airlines to ax fuel surcharges

October 20, 2008 4:52:06 PM PDT
Sen. Robert Menendez is calling on airlines to stop imposing ticket surcharges initiated over the summer in response to record fuel prices, which are down 45 percent since July. The federal lawmaker sent a letter to 11 U.S. airlines Monday requesting they discontinue the surcharges and other fuel-related fees, rather than use them to expand profits.

"It's deceptive to say you still need a fuel surcharge when aviation fuel prices are down $2 per gallon," Menendez said. "It's just wrong."

Spot prices for kerosene-type jet fuel averaged $2.34 a gallon last week, 45 percent less than the $4.33 average in July, according to Menendez. Aviation fuel is refined from crude oil, which fetched $74.25 a barrel on the New York Mercantile Exchange Monday, compared with a record $147.27 in July.

U.S. airlines imposed a slew of new fees in reaction to record fuel prices. They include fuel surcharges on some flights and new fees for baggage, food and beverages.

Beverly Goulet, vice president of AMR Corp., the parent company of American Airlines, estimated the fees generate "several hundreds of millions of dollars" for her employer in a Sept. 17 presentation to stock analysts.

AMR did not respond to a request for comment Monday. Betsy Talton, a spokeswoman for Delta Airlines, also did not return a call requesting comment.

Gerard Arpey, chief executive officer of AMR Corp., said in an Oct. 15 statement that it would be "shortsighted to conclude that fuel prices, which remain volatile, are no longer a challenge."

David Castelveter, a spokesman for the American Transport Association, said the decision on surcharges will be dictated by competition in the marketplace among individual airlines. The group is a trade association that represents the major U.S. airlines.

"The U.S. airline industry continues to operate with uncertainty," Castelveter said. "We're going to lose several billion dollars this year."

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