Air France and KLM are part of the same corporation so it is not unusual to see their marketing operations work in tandem.
What they announced today however is an air freight market changer. Both carriers announced that fuel surcharges, which have been soaring, will be calculated from September 1, 2008 based on MILEAGE.
There are a few implications. First is the change to the model in general. Second is the impact to the Skyteam joint marketing alliance. The Skyteam member airlines market their cargo businesses under a joint venture between the carriers for sales purposes. With divergent Fuel surcharge mechanisms, it will be interesting to see how a shipment that misses a Delta flight to Europe but then loads to an Air France jet, will differ in charges.
This has so many huge implications for future contract negotiations as well as Forwarder block space agreements.
I just wonder when they can tell me when I can exchange my frequent flyer miles for gasoline coupons. (that might actually be pretty attractive for airlines with members with low mileage balances).
Air France-KLM Modifies Surcharge Mechanism Air France Cargo and KLM Cargo on Tuesday unveiled a fuel surcharge mechanism based on flight miles to better reflect today's realities of punishing high jet fuel prices as well as provide shippers with a more transparent method of collecting the fee from customers. The revised mechanism also represents a complete change of the present model for air cargo surcharges. Effective Sept. 1, the fuel surcharges will be incorporated into the shipping rates, making them commissionable. Under the old system, forwarders complained that the carriers would adjust the fuel surcharges but let the rates stagnate or slide. The portion of the fuel surcharge going to the forwarder was reduced under the old system.
The United States dollar will serve as the
basis for the new mechanism and be converted to the Euro and other
currencies for invoicing. Existing exchange rates will be used to
determine the new fuel surcharge levels should prices increase or
decrease.
"The validity of the current fuel surcharge mechanism is at its end
as the important underlying factors (the United States dollar and the
price of oil) have gone to structural new levels," said Michael Wisbrun
executive vice president for Air France-KLM Cargo. "For transparency
reasons and in answer to the requests of our customers, Air France
Cargo-KLM Cargo is taking this step." The new model will be based upon
short haul, medium haul and long hall flights, and fuel surcharge
increases and decreases will now be implemented in steps of ten cents
instead of 5 cents.
"In order to increase stability and prevent changes due to
short-term peaks, a monthly moving average will be used for the jet
fuel price," said a statement released to reporters in Paris announcing
the plan.
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