Oil Dropping – But LIAT Keeps High Fuel Surcharges!

With Oil now dropping to around US$40 a barrel WHY have LIAT’s fuel surcharges not been further reduced?

liat-airlines-disasterBuy the cheapest currently available return airline seat from Barbados to St. Lucia and you will pay US$200.45.

Of that figure US$125.45 are passenger facility charges, VAT, Airport Departure taxes (US$52.50) Airport Authority or Passenger tax and a massive US$47.50 in fuel surcharges and insurance.

First of all I wonder how consumers would respond, if hotels and other tourism partners starting showing insurance as an additional add-on?

Secondly, exactly what is the current fuel cost of flying a full Dash 8 to St. Lucia from Barbados and back?

Less than US$2,375 or the fuel surcharge applied methinks!

So when exactly is LIAT going to pass on their fuel savings?

They chose to run to the media when a token reduction of US$5 came off previous surcharges. Now that the cost of oil is nearly a quarter of price paid a few weeks ago, how much longer will it take to respond?

Is this another case of price gouging?

And as LIAT is owned by a number of Caribbean Government’s are they complicit in that price gouging?

Many airlines have already substantially reduced or totally eliminated fuel surcharges, so have cruise ship companies, but not LIAT!

So many questions!

Adrian Loveridge

8 Comments

Filed under Aviation, Barbados, Barbados Tourism, Consumer Issues, Tourism, Travel, Traveling and Tourism

8 responses to “Oil Dropping – But LIAT Keeps High Fuel Surcharges!

  1. Hants

    Air Canada and West Jet dropped their fuel charges.

    Now Air Canada Toronto to Barbados next week is $475.cdn round trip.

    Liat needs to get with the program.

  2. The Scout

    When a company has a monopoly, they can do as they like. In this case the supporting governments of LIAT should call on the airline to adjust their airfare. At less the tax payers of these countries sholud benefit from a reduced oil price.

  3. yatinkiteasy

    American Airlines are just as crooked…see what they are charging to go to Puerto Rico…its highway robbery!

  4. Verdana

    It is obvious that this is price gauging…and you ask?

  5. Sean Fields

    Well……i don’t know all the facts but i can say that based on my conversation with a Pilot around august, LIAT may not necessarily be price gauging.
    In that conversation, this pilot happened to be a senior captain with a european airline and he said that they were lucky to have battered a fix price deal for fuel for their planes for the next 18months or so. he said the cost was in the 100’s of millions of dollars but would allow them to be able to maintain competitive pricing.
    as far as i am aware LIAT does not have the money to purchase fuel for that long a period and so they are more vunerable to changes in the fuel charges, which incidentally works on a last in first out principle.
    the oil companies sell the fuel based on the production and storage cost at the time.
    so fuel that was produced when the oil price was near US140.00 will be sold first. they will not sell the fuel produced when the oil price was less before they have emptied the stores of the higher priced one. This may explain why LIAT still has the surcharge because they may be still buying fuel at the higher price. ideally, the price should drop as the fuel stores are used but it is possible that LIAT might also use the opportunity to recover losses incurred. is’nt that what the goverments in the caribbean have done or are doing? by the way………the fuel bought for aviation is not subsidized and hence the price is determined by market forces. so even though the cost of fuel at the pumps have gone down, this is really a subsidy issue and not one of market conditions.

  6. Hants

    Good news Barbados. West Jet and Air Canada bringing nuff people from now till January.

    Treat the visitors nice. yuh hear!

  7. J

    Hants I hear that up there in Ontario you folks are turning wine into tap water 🙂 (and at Christmas time too)

  8. Eye95

    Hants,

    I thought that airlines acted on projections that fuel would have fetched $US200 per barrel by December 31st 2008 and therefore bought substantial quantities when the price reached US$140.00.

    It would suggest that airfares will remain high for some time.

    Even if airlines now buy significant quantities at the present price of $42.66 and the price drops – say to below $US$30.00 per barrel – high prices will continue for some time and until airlines feel that they have recouped their losses.

    How else can people fly? On a duck or on a doctor booby?

    There is a message in this for the Government! It cannot rain all the time or can it?