China’s civil aviation administration announced that fuel surcharges will be eliminated on domestic flights effective February 5.

Chinese carriers will this week scrap fuel surcharges for domestic flights for the first time since late 2009 after fuel costs fell below a government-set level.

Air China, China Eastern Airlines, China Southern Airlines and other carriers will abolish the surcharge from February 5, a spokeswoman for the Civil Aviation Administration of China (CAAC) said.

Here’s what fuel surcharges are and how they work.

Fuel surcharges aren’t about fuel.

• They are a convenient, easy way to raise or lower all fares in a market.
  
• Since they are a surcharge rather than part of the fare, they aren’t subject to percentage discounts that may attach to certain contracts.
  
• They conveniently are an excuse to charge more for award passengers (in some programs and for travel on some airlines), whose mileage currency can’t be used anywhere a member wants the way cash can.

Nonetheless, since airlines have used the price of fuel as the narrative for high costs, and explains surcharges rather than changes in fare as fuel (even though when coded as “YQ” they are ‘miscellaneous’ charges in the fare construction), it’s becoming tough for the storyline that attaches to these fees.

Some airlines are just calling them ‘carrier surcharges’ .. replacing the name.

But we’ve seen Australian carriers drop these on specific routes, and the Philippines outlaw them on tickets originating in that country (which presents an award redemption opportunity).

A year ago I predicted that we wouldn’t see fuel surcharges spread to US frequent flyer programs more than they already had. Now we’re seeing some fuel surcharges disappear, no longer sustainable with fuel prices dropping so dramatically.

• Make no mistake, they’ll come back if and when fuel gets more expensive.
  
• The elimination of fuel surcharges doesn’t make paid tickets cheaper, the surcharge goes away but the fare goes up.
  
• The consumer benefit is in award tickets, because airlines can’t add a fuel surcharge easily to award travel that doesn’t exist on paid tickets.
  
• Some airlines will be reluctant to give up the cash or let members benefit, and will charge arduous ‘carrier surcharges’ instead.

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