JonNYC at TravelingBetter.com posted that effective March 1, American AAdvantage will begin adding (modest) fuel surcharges to awards booked on their oneworld partner Iberia.

The YQ fuel surcharge amount is based on the market and varies from 7.50 Euros up to 30 Euros.

Fuel surcharges are often $400+ so the amounts here aren’t bad, but it is a worry to see a US airline mileage program extending the practice of hitting members with fuel surcharges on ‘free’ frequent flyer award tickets.

Two weeks ago I wrote an extensive explanation of fuel surcharges added to award tickets. Basically, programs outside of North America have charged them for awhile (though SAS EuroBonus actually stopped the practice a couple of years ago). Aeroplan was charging them only on Air Canada flights until a few months back, and now charges them on most partners. But for the most part US airlines have stayed out of the business of making ‘free’ award tickets anything but free, at the point they add $400 or more onto the cost of a redemption.

The exceptions to this, where US programs have hit members with fuel surcharges, have been the aforementioned American AAdvantage with British Airways awards — priori to the introduction of the American/Iberia/British Airways Joint Business Venture, American didn’t offer British Airways flights from the US to London, but they also didn’t add fuel surcharges. You could book from, say, Canada or the Caribbean to the U.K. and from the U.K. anywhere else the world — just not from the U.S. You could fly transatlantic to London and on to Africa, no fuel surcharges. Now an all-BA award can run you upwards of $1000 per person, even using miles.

But the practice was limited to British Airways awards, until the new news about Iberia. British Airways award availability in premium cabins is so good that I’m even willing to pay the freight, from many US gateways getting award seats is really quite easy. And the Iberia amounts are small. So the worry here is about growth in the practice, not about anything that has been announced so far.

Delta has added fuel surcharges for awhile to many awards originating in Europe, and also to redemptions with specific partners (mostly Asian carriers) and more recently to V Australia (presumably because their award availability was ‘too good’ it was costing Skymiles real money).

The truth is that fuel has little or nothing to do with it, it’s a hidden tax on a captive market but airlines may see immediate revenue from folks redeeming accumulated miles, those members are shocked at the costs and sour on the program at redemption time which is usually the moment when loyalty is most reinforced. It’s a long-term dangerous strategy that may backfire on programs, though presumably the bet is that as more and more airlines add these fees that as long as a new equilibrium is reached where all carriers do it’ll make no difference to loyalty (or if members don’t know about or understand the differences they won’t know where to go).

United doesn’t hit their members with fuel surcharges. Neither does US Airways, their international redemption surcharges are minor as well. Alaska adds fuel surcharges to awards on British Airways only.

I still like American miles best for first class awards, but this strikes me as a dangerous precedent — for American, and that other U.S. carriers could expand in this space as well.