Figuring Out Private Jet Fuel Surcharges

They are not just Joe and Jill to all who are being beaten with record prices in the gas pump. Do not get your violin, but users of private airplanes are paying fuel surcharges that vary in thousands of dollars per hour. That is aware of general price increases. At the end of the first quarter, the average rate per hour for jet cards was 21% higher than at the end of 2020. If it is not flexible, the prices of the letter at request can be easily twice as well as what I was paying less than 18 months.

“It’s outrageous,” a frequent private flyer told me after being beaten with a five -digit fuel surcharge invoked more than two months after he reserved and paid for flights. His choice was to pay, or could obtain a reimbursement, which when choosing the latter meant that he would have to start in the square one and a price of the trip again. He asked: “Do you have the right to do this?”

Well, the answer is that it depends on who you speak with and, of course, what is in your contract.

Several runners with whom I spoke said they have been absorbing surcharges for regular customers. They believe that additional positions are not turning, but they reflect the cost of doing business. Charter flights reserved months ago had a price of good faith according to fuel costs at that time. “We want our operating partners to have a sustainable business. We do not want them to look for places to cut corners, ”says Anthony Tivnan, president of Magellan Jets.

The biggest problem is when operators wait until a few days before the flight. Andrew Vanderpletoeg, senior vice president of the Private Jet Services Group, recalls: “We had a notable trip on a large plane. Four or five days before the game, without any fuel language, (the operator) said: “We have to add (a fuel surcharge) to the trip.” It was a significant sum of money, and they only said that they take it or leave it. It was almost a five -digit number. “The company ate the additional cost, he says.

Kevin Diemar, CEO of Unity Jets, says that there have only been a few cases that operators return and demand extra money to cover the increase in fuel costs. He says that they are the trips that were reserved several months ago. While it is frustrating when the operators only notify the surcharges, he believes that it is mainly because “they are suddenly looking at the trips of next week and someone says:” That (the price) makes no sense. “

For members of reaction card programs, many are finding small impression on their contracts with 30 -day clauses, which allow the supplier to implement additional rates and change terms with notice, and specific clauses of surcharge by fuel. These fuel surcharges often specify when and how much additional costs will be. In some cases, fuel surcharges are updated monthly or quarterly, while other suppliers recalculate the surcharges by weekly fuel. The surcharge is based on the price when it reserves, not when it flies, which underlines the complexity of discovering what to collect. Some surcharge amounts are based on the cost of fuel when signed the contract.

Flyexcluive is now building fuel costs in constant change in its fares per fixed hour. It uses a sliding price scale published by which the rate of the reaction card per hour fluctuates depending on the national price of aircraft fuel during the last two weeks of the previous month. When making the change, it gave customers the option to keep their existing program. These contracts included fuel surcharges calculated in six -month intervals based on the price of fuel when the contract was signed. That meant that some members faced surcharges of more than $ 2,000 per hour.

That said, a member of his original Jet Club said he was not sure of what he would do since his contract only had 15 days peak, and the current program he would change has 45 peak and high demand days. “If I go to the new contract and I need to fly on peak days, I could end up spending more than fuel surcharges,” he says.

The CEO of a large charter operator says about the industry: “Until a month ago, there was no standard about whether there was language about the ability to add a fuel surcharge.” However, he says with the prices that increase: “All the operators I know, if they did not have one, have added a fuel surcharge clause.”

For operators, the increase in the cost of fuel is causing a lot of problems.

From last week, the Fuel Price Monitor for IATA aircraft had the average price of aircraft fuel in North America to $ 4.20 per gallon, 126% more that makes the same time. However, a small headquarters based at the Teterboro airport in New Jersey on the other side of the river from New York City says that most of its flights are between the New York area and southern Florida, where prices They have reached $ 10 per gallon, more than double the national average.

At that price, the cost of fuel for a 5000 Global Bombardier would cost $ 5,060 per hour, according to Conklin and Dedecker, about $ 4,048 more per hour than when the fuel for airplanes was $ 2 per gallon.

Larger operators have national discount programs and try to plan their flights to buy fuel in places of lower cost, but an CEO says: “It is more aspirational. We can plan to buy fuel where it is cheap and oil, but you must calculate the cost of the additional weight, and then, when you think you are saving money, a customer changes its trip and is buying fuel somewhere expensive because I do not “have an option.”

The Titan Aviation Fuels CEO, Daniel Coetzer, says that the United States is hitting more with multiple layers of taxes and a business model where the sale of fuel is an important part of the profit model for the FBO. And although fuel prices may vary between FBO at the same airport, ironically, fuel is often maintained in the same shared storage tank.

If your contract does not have a fuel surcharge clause, can your supplier still impose a surcharge?

David Hernández, partner of Vedder Price and former Dot and FAA lawyer, says: “Any company that today affirms that a fuel surcharge is an unpredictable circumstance, Force Majeure – That prevents them from fulfilling the terms of a Charter trip is taking a risky position. Fuel prices shot months ago, and fuel surcharges are no longer an unpredictable circumstance. “

He says that the regulations of the Charter of the Department of Transportation require that the runners and operators of the air chart reveal the fuel surcharges, and the lack of doing so is probably a misrepresentation with respect to the charges, which he would be considered ” unfair or misleading practice in violation of points regulations. “

The DOT has an online complaint and a comment form if you want your voice to be heard. Hernández says: “I would not be surprised if the DOT performs application actions against aerial carriers and corridors that ambush the customers of the letter with last minute fuel surcharges when they have no choice but to pay or cancel the letter.”

Even so, do not expect much in terms of compensation. Hernández says that although he can file a complaint, contracts generally contain a language that prohibits consistent damage. That means that even if he took his supplier to the court and won, he would not recover the costs related to obtaining a replacement letter.