A fuel surcharge is an extra cost associated with jet and helicopter charter rates. It’s added to the cost of the trip to cover the cost of the increased price of fuel. Fuel prices are constantly fluctuating, so a surcharge is put in place to help recover any additional costs. The surcharge, however, is typically adjusted each month to ensure it covers the current price of fuel.
Factors Effecting the Cost of Fuel
There are many factors that contribute to the cost of fuel. These factors also cause the frequent fluctuating rate as well.
As with vehicle fuel, jet fuel is also dependant on the price per barrel of crude oil. When the cost of a barrel is low, oil production typically slows down. This is because oil companies struggle to remain profitable when prices are low. However, once the price comes up, production ramps up again. This can cause the price of jet fuel to fluctuate, and in turn, cause the price of jet and helicopter charter rates to fluctuate as well.
Some other factors that contribute to the rise of fall of fuel prices include:
- Marketing and costs associated with running a service station
- Taxes, which varies from state to state
- Refining costs, which depends on the area the fuel is produced
- Geopolitics, which depends on which country to fuel is produced in
- Market demand
- Exchange rates