NEWARK, NJ – U.S. Senator Robert Menendez (D-NJ) today pressed airlines on the fuel surcharges and extra costs for flying that they have implemented over the Spring and Summer. In a letter to the CEOs of the major U.S. air carriers, Senator Menendez pointed out that airlines cited exorbitant oil and jet fuel prices as the reason for surcharges and fees, such as those for checked baggage, but that the cost of jet fuel has dropped precipitously over the past few months. The spot price for Kerosene-Type Jet Fuel in New York Harbor – a major jet fuel price indicator – has fallen from $4.34 per gallon in early July to $2.34 per gallon last week..

 Senator Menendez urged the CEOs to roll back the extra charges and to make the base fares that consumers see online more reflective of the actual price they will pay to fly.
 
“It seems to me that the extra costs of flying imposed over the summer are less relevant as fuel prices have declined,” wrote Senator Menendez. “If the price of jet fuel, which reached $4.34 per gallon in July, prompted fare increases and schedule reductions, then it should also spur a roll back of surcharges and fees, with price per gallon having dropped to $2.34 last week. Americans are having a hard enough time keeping up with their bills these days. To keep many of them priced out of flying altogether is not only devastating to many families, it also slows the engine of commerce that helps propel our economy.”

“I urge you to pass the savings from lower jet fuel prices on to the American public by rolling back fuel surcharges and extra fees. If you tell the public that you need long-term higher prices to survive, I urge you at the very least to do it directly through fares rather than a collection of confusing and hidden fees.”

Senator Menendez sent the letter individually to each of the following major airline CEOs:

Robert Fornaro, CEO, AirTran
William S. Ayer, President and CEO, Alaska Airlines
Gerard J. Arpey, Chairman, President, and CEO, American Airlines
Larry Kellner, Chairman and CEO, Continental Airlines
Richard H. Anderson, CEO, Delta Airlines
Sean Menke, President and CEO, Frontier Airlines
David Barger, President and CEO, Jet Blue Airways
Douglas M. Steenland, President and CEO, Northwest Airlines
Gary Kelly, CEO, Southwest Airlines
Glenn Tilton, Chairman, President and CEO, United Airlines
Doug Parker, Chairman and CEO, US Airways

Below is text of the letter:

October 20, 2008


Dear [Airline CEO]:

            We all know that these are difficult economic times across the board – for airline companies, for the average family of four who wants to visit relatives this coming holiday season and for most everyone in between. Perhaps the only silver lining from the recent economic turmoil has been the plummeting price of oil, which now hovers around $70 per barrel, its lowest level in more than a year. As a result, motorists have seen gasoline prices at the pump continue to fall, and along with them has come down the price of the jet fuel that your industry relies upon.

            I understand the budgetary pressures that your companies have been feeling, particularly when oil was close to $150 per barrel in June and July. We were told repeatedly how the surcharges, fee increases and flight reductions you implemented at the time were necessary in the light of sky high fuel prices.
 
            The situation with regard to oil and fuel prices has changed since then. Between July 2nd and last week, the spot price of Kerosene-Type Jet Fuel in the United States fell by $2.00 (46 percent), to its lowest level in a year. Commodities prices are still falling, and jet fuel should continue to follow the continued decline in the prices of crude oil and gasoline.

            Such a precipitous decrease in your fuel expenses has no doubt helped your bottom line. Just last week, it was reported that airlines have benefitted in the markets because of the higher airfares they are charging and the lower price they pay for fuel (“Southwest, Continental Gain as Fares Rise, Fuel Falls,” Bloomberg News, October 16, 2008).

            As we all know, American families are struggling, dealing with job losses, falling home values, and a financial market that is erasing their retirement savings. It is crucial that you pass on the savings seen from falling fuel prices as quickly as possible. Now is not the time for Americans to be priced out of traveling – that is simply unfair to families who want to spend the holidays with their loved ones and it is bad for our economy in need of a boost.

            To this point, the only rollback in fees or surcharges that I am aware of is the discontinuation of fuel surcharges on some flights between the U.S. and Europe. That represents only a fraction of the flights Americans take and only a fraction of the extra money Americans have been shelling out to fly. All domestic and many international surcharges remain in effect. Checked baggage fees, even on the first bag, remain in effect. Fee increases, such as those on unsupervised minors, pets and overweight baggage, remain in effect. Some airlines charge fees for flying standby, for travelling with an infant on their lap, or even for choosing a seat in advance. There has been no indication that these will be reduced or lifted at anytime in the foreseeable future, regardless of how low fuel costs go.

            As such, I would like to know your plans for these new and increased fees and surcharges.  Are they intended to be permanent? At what price for fuel will you roll them back? Can Americans expect relief anytime soon?

            This is a larger issue than simply high travel costs. The plethora of fees and surcharges one must pay to fly distorts the marketplace and is fundamentally anti-consumer. The flying public should be able to directly compare flights and airports without having to sift through a pile of excess “fees”.  People want a simple number so they know what they will be paying, not a complex formula that makes it difficult to make an informed choice.

            It seems to me that the extra costs of flying imposed over the summer are less relevant as fuel prices have declined. If the price of jet fuel, which reached $4.34 per gallon in July, prompted fare increases and schedule reductions, then it should also spur a roll back of surcharges and fees, as the price per gallon dropped to $2.34 last week. Americans are having a hard enough time keeping up with their bills these days. To keep many of them priced out of flying altogether is not only devastating to many families, it also slows the engine of commerce that helps propel our economy.
I urge you to pass the savings from lower jet fuel prices on to the American public by rolling back fuel surcharges and extra fees. If you tell the public that you need long-term higher prices to survive, I urge you at the very least to do it directly through fares rather than a collection of confusing and hidden fees.

            I thank you for your consideration and look forward to your response.


                                                                                    Sincerely,



                                                                                    ROBERT MENENDEZ
                                                                                    United States Senator


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