An Australian court has ruled that airlines are liable to pay commissions to travel agents on fuel surcharges that date as far back as 2004. This affects not only Australian carrier Qantas, but other international carriers that operate flights out of that nation. Will the added costs mean higher fares?

Last year, more than 1400 travel agents filed suit to gain commissions from airlines who had not paid them on the portion of the ticket that involved fuel surcharges. The agents argued that the fuel surcharges were part of the commissionable part of airline tickets which they sold on behalf of Qantas and other airlines. The court disagreed, stating that airlines were not obliged to include fuel surcharges when paying commissions on international tickets. On appeal, this decision was challenged (specifically against Qantas to determine liability) for the period between 2004 and 2007. The previous decision was subsequently overturned in Federal Court which declared that fuel surcharges were not a tax and should be commissionable.

The decision has strong implications for airlines beyond Qantas. Air New Zealand, British Airways, Cathay Pacific, Singapore Airlines and Malaysia Airlines were involved in the original case before the appeal focused solely on Qantas as a test case. Eventually many airlines could all be liable for retroactive commissions on fuel surcharges. Qantas has expressed disappointment but will study its options. The case now goes back to the original judge to determine the damages.

Fuel prices are on the increase again. If airlines begin relying on surcharges to shore up the added expenses for fuel, the case of commissionable surcharges could be precedent-setting. If other countries rule that fuel surcharges are not exempt from such payments the way taxes are, then airlines will need to reconsider the amount of the fuel surcharge and whether to include it as part of the base fare. Airlines typically like to keep such charges separate so that their base fare remains competitive with other carriers. This decision may change the game. Either way, the passenger will probably wind up paying more.