Air France KLM’s Flying Blue program is increasing mileage costs for premium cabin awards and reducing fuel surcharges.

Fuel surcharges are a convenient way for airlines to raise and lower prices quickly across an entire market without re-filing every single fare in that market — they save time and effort since they apply equally to all fares.

Those charges also help airlines raise price on a bunch of discounted tickets, since these fees are on top of the base fare so discounts usually don’t apply to the surcharges.

But for frequent flyers they are a pain because some airlines — most notably European and Asian frequent flyer programs, but also a handful of North American programs (Aeroplan on about half of its Star Alliance partners, American predominantly on British Airways, and Delta on several partners) — add fuel surcharges onto award tickets. The claim is that the miles pay the cost of the base fare only and not the so-called surcharges which are really a part of and meant to be a part of the price of the ticket.

These charges can make roundtrip transatlantic travel on miles cost nearly $1000 cash. And even though airlines frequently add lower fuel surcharges to coach tickets than premium cabin travel, these fees make redeeming for coach not at all worthwhile — you use your miles and still have to pay nearly as much for the ticket as though you were buying it with cash. The miles become next to worthless.

Premium cabin travel can still make good sense even when paying the fuel surcharges, since there’s a huge savings relative to purchased tickets.

Under these Air France changes:

• Coach awards don’t go up in mileage cost, but they’re slashing fuel surcharges down to 50 euros each way. Great improvement, and coach travel could really make sense when Flying Blue runs 50% off promo awards.
  
• Mileage cost for premium economy will go up, specific amounts aren’t yet clear, while fuel surcharges will go down.
  
• Business and first class mileage award prices will go up as well, but fuel surcharges for non-stop long haul flights will not go down (those are 180 euros each way or ~ US$470 roundtrip plus taxes), although it appears that short-haul connecting flights will be thrown in without additional surcharges.
  
• They claim better award availability in business class, though business class availability is hardly a challenge now on Air France. First class awards presumably remain available only to Flying Blue elites and only at double miles.

The changes will go into effect in June, but through the end of the year current award prices (with current fuel surcharges) can continue to be booked on request by phone.

There’s an extensive discussion of the changes, which declare “Our examples below make each change crystal clear” only the discussion does not make the changes clear at all and we’ll need to wait until the actual new award chart gets posted and actual availability under that chart can be searched, and the cost of taxes and fees for specific itineraries will price in order for the changes to be clear apparently.

I like dropping fuel surcharges, but they don’t drop much in premium cabins which is how I’ve learned to use their points.

Air France KLM Flying Blue is an American Express Membership Rewards transfer partner, points post instantly, and availability on Air France is much much better than that offered by partners Delta or Alaska Airlines. You can often get seats without difficulty, several seats even, in business class.

Business class awards will still be expensive in cash outlay, and will start costing more miles as well come June (with the ability to book at lower mileage levels through December, a good and fair move to give reasonable notice of changes to members).

While economy awards may sometimes make sense with this program, which they generally didn’t before, business class awards will be less valuable. Still, 50% off promo awards are valuable, American Express sometimes runs transfer bonuses which helps offset increasing award costs, and excellent availability can make high costs (begrudgingly) worthwhile.

Coach travelers will welcome the changes, those looking for premium cabin awards likely will not.

(HT: Loyalty Lobby)

Update: Thanks to commenter Nick, it appears the June onward award chart for travel to and from Europe has been posted. Business class from North America to Europe and back goes up 25% from 100,000 miles roundtrip to 125,000 miles.