Oil prices tumbling, but airlines won't end fuel surcharges
Published Monday, December 15, 2014 10:00PM EST
Despite tumbling oil prices, airlines have no plans to remove their fuel surcharges, frustrating holiday travellers who have been expecting a break in flight costs.
The price of oil slid to US$55.41 on Monday – the lowest price in more than five years.
But even though some transportation companies, like BC Ferries, have announced that they will eliminate the fuel surcharge charged to customers, Canadian airlines are not following suit.
Air Canada and West Jet say they don’t get a break on jet fuel because they buy it in U.S. dollars.
But one aviation expert is not buying that explanation.
“I think they probably have more latitude right now to lower fares if they happen to want to,” said Rick Erickson. “Remember, they're not doing this for a hobby, they're trying to make as much money as they possibly can. It's the high season right now.”
The Associated Press has reported that airlines have responded to high fuel prices by limiting the number of available flights, thus driving up demand which allows them to charge higher fares.
Canada Post has slightly dropped its fuel surcharge, as has Federal Express. On Monday, BC Ferries announced it will eliminate its 3.4 per cent surcharge altogether as of Wednesday.
Falling oil prices also mean a lower Canadian dollar, which closed at US 85.79 cents Monday. All this is threatening government finances, including Ottawa’s projected surplus next year.
With a report from CTV’s Richard Madan