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On the other hand, legacy carriers with full-service promised choose to add “fuel surcharges” to tickets instead. However, both tactics have a natural limit and airlines will have to consider other strategies to deal with rising costs such as reducing capacity or seeking for mergers to achieve big cost reductions.
Mason (2005) indicated while the fuel charge hits the record high, the airlines yield evolution shows an inexorable decline since year 1970 due excess capacity in the market.
Fig 1. Yield evaluation 1970-2001. Source: Manson (2005), Journal of Air Transport Management
Manson (2005) also pointed out that the airlines industry has long relied on a combination of high-fare business travellers and a large number of low-fare economy passengers...
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