When are fuel surcharges applicable for a private jet charter?
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Fuel surcharges never existed until Hurricane Katrina. Katrina caused damage to several oil refineries. This helped spike fuel prices to $7.50 per gallon. Over time, as the oil refineries were fixed and fuel prices went back down, many operators maintained the fuel surcharge as a profit center.
Some brokers highlighted the redundant nature of these fuel surcharges to operators, so most have now removed them. However, some maintain this questionable practice; even when fuel rates were reduced to $2.85 a gallon, these operators didn’t lower their rates. The bottom line is that operators should not be charging a fuel surcharge unless there is a genuine surge in fuel prices.
Fuel prices have been low for a long time. Because of this, most operators will not add a fuel surcharge, even during brief price spikes. Instead, most operators will purchase fuel in advance based on a hedged fuel contract when prices are low. They commit to these future contracts while rates are low, which ensures that future fuel price spikes won’t affect them.