Fuel is one of the largest variable costs that face an airline, closely followed by staff. So with all the talk in the news about inflation and rising fuel prices, what does that mean for flights?
Well, airlines saw this coming months ago and the changes have been underway for some time. Airlines operate more like investment banks nowadays and have internal teams that look at commodity pricing every day and work hard to hedge their bets to try and keep their fuel price as low and predictable as possible.
Despite that, however, inflation affects everyone. There is no doubt that flight costs will go up, and this will be reflected in prices. It’s called inflation for a reason!
“Taxes” on points tickets
One of the things you will be seeing right now, and for some time to come, is higher flight prices overall. The prices have to be higher due to the rampant inflation, but they also have to include an extra margin for error because the situation has not stabilised yet.
One of the places this is incredibly obvious, is when you look at a point’s ticket. I wrote an article some time ago called watch out for the YQ. This innocuous-sounding fee is actually a bit of a con. Its official name is “Carrier Imposed Surcharge”. It’s a way of airlines adding or increasing their prices across the board without needing to reprice thousands of fares. Because it’s burried in the fare breakdown, it’s easy to think this is another government or airport-imposed tax – it isn’t.
Recently, YQ prices have been going up. I’ve seen points tickets with nearly £1000 per person “fees” and taxes attached. The majority of that is the YQ charges being applied. That is what I call – crazy high!
Because of the rising fuel prices, there are higher fees (YQ) on points-based tickets. Don’t just blindly pay high YQ prices, they will cool off as the economic situation stabilises.
Now, more than ever, you should ask yourself – does it make sense to use the points if the fees are so high? If the answer is no, buy a cash ticket and save the points for a time when you can get better value and hand over less cash.