Qantas slashes fuel surcharges to close loophole

Qantas will slash fuel surcharges for economy seats on international flights by as much as two-thirds to close a loophole in its alliance with Emirates, which allowed frequent flyers to avoid hundreds of dollars in fees.

But the move to align fees between the two airlines has resulted in Emirates increasing its fuel surcharges for a one-way economy flight to Europe from $75 to $230, and to Asia from $30 to $145.

Since the alliance began on March 31, savvy travellers have avoided hundreds of dollars in fuel surcharges by redeeming their frequent-flyer points on Emirates rather than Qantas, which had higher fees.

To remove the discrepancy, Qantas will reduce fuel surcharges for one-way economy tickets to Europe by $150 to $230 to match Emirates. The biggest cut will be to the fuel fees Qantas charges for economy flights to the Middle East, which will drop by $200 to $115.

Qantas and Emirates emphasised that the change in the make-up of fares will not alter the overall cost of tickets. Fuel surcharges are mostly an expensive irritant for frequent-flyer members because they have to pay them even when they use their points to buy tickets.

Qantas would not put a figure on the hit to its revenue from the latest changes.

To mirror its partner, Qantas will now charge different fuel fees depending on the class of seat, instead of its previous policy of a flat charge for all passengers.

While Qantas surcharges for business-class tickets to the Middle East will fall from $315 to $155, those to Asia will rise from $175 to $190 and to Africa from $260 to $380.

The surcharge for one-way business-class tickets to Europe will remain unchanged at $380.

The changes to Qantas' levies will apply only to routes that are part of its alliance with Emirates, which encompasses Europe, Asia, North Africa and New Zealand.

Fuel surcharges on Qantas flights to South Africa, the US and South America will remain unchanged.

The changes will apply to tickets issued from July 1.

The airline said that its passengers who redeemed their points for an economy class seat on an international flight would see an average fall in surcharges of about 30 per cent across the alliance's network.

Emirates' fuel surcharges for business and first classes will rise from $230 to $380 for one-way flights to Europe and from $165 to $190 for Asia.

Closing the loophole has been high on the agenda of talks between Qantas and Emirates executives over the past month. Travellers wanting to fly economy from Australia to London return had been able to escape paying as much as $610 in fuel surcharges by redeeming their points on an Emirates flight rather than Qantas. They could also pay $290 less for a return economy with Emirates to an Asian destination.

Qantas and Emirates cannot raise the total cost of a ticket considerably higher than their rivals because it would make them uncompetitive. But they can try to recoup the cost of fuel by imposing fuel surcharges on passengers who are using frequent-flyer points to pay for their fare.