Airlines reluctant to eliminate fuel surcharges

NEW YORK (AP) -- Most major airlines plan to maintain a fuel surcharge of $20 on each one-way ticket even though the price of jet fuel has been cut in half during the past year.

The industry's reluctance to drop the charge contrasts with the nation's major hotel companies, which have eliminated the additional fees they put in place to combat skyrocketing energy prices.

"Regardless of what fuel prices do, our costs continue to rise and, especially in today's market, we need every nickel we can get because we are still losing about $10 million a day," said John Hotard, a spokesman for American Airlines, the nation's largest carrier, said Tuesday.

Industrywide losses are likely to be $10 billion for the year, analysts predict, due to drastically lower demand attributable to the recession and the Sept. 11 attacks.

While airlines have cut fares to try and spur demand, they have stubbornly held on to the fuel surcharges, which now make up roughly 15 percent of the average domestic ticket price.

Industry watchers said airlines have a history of adding fuel surcharges whenever energy prices go up. However, when prices come down, the surcharge is typically subtracted in name only. An equal amount, analysts and industry officials said, is typically shifted to the base price of a ticket.

As Minneapolis-based airfare analyst Terry Trippler put it: "Fuel surcharges are eliminated but reincorporated."

Northwest Airlines of Eagan said it has no plans to eliminate the surcharge because it hasn't yet been fully compensated for extra money spent on jet fuel before prices plummeted.