Airlines are in on the Fuel Dump game in a big way


Fuel dump [fyoo-uhl duhmp] (noun):

1. An airfare construction designed to reduce the YQ fuel surcharge that airlines place on certain routes. Used by passengers to save potentially hundreds of dollars per ticket.

2. A tax avoidance scheme perpetuated by airlines via shell companies to avoid paying millions of dollars annually to the city of Chicago

A nod of the cap to Frequently Flying for mentioning this story yesterday. Basically American Airlines and United Airlines have both set up shell companies in Sycamore, IL where they buy lots of jet fuel. Sycamore is just over an hour west of O’Hare and doesn’t really have much to do with airport or airline operations, other than that the city government there was nice enough to set up a great kick-back system for the airlines.

When jet fuel is purchased in Illinois it is only taxed at the retail level. By placing the wholesaler in Sycamore the airlines are able to avoid a 1.75% Chicago city tax on fuel. Even better, however, is that the city actually refunds part of the city tax paid. Of the 8% sales tax charged only 5.25% goes to the state. The city gets to decide how they want to spend the other 2.75%. And the city has decided to give most of the cash back to the airlines in exchange for hosting the operations in Sycamore. The city keeps only about $400,000 of the funds and is "thankful for the revenue stream."

Makes me feel a bit less bad about trying to trim a couple hundred dollars of fat from a few fares every now and then.

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Seth Miller

I'm Seth, also known as the Wandering Aramean. I was bit by the travel bug 30 years ago and there's no sign of a cure. I fly ~200,000 miles annually; these are my stories. You can connect with me on Twitter, Facebook, LinkedIn and .

5 Comments

  1. Unless I’m just doing something wrong, the old tricks that I had heard from people on a certain frequent flyer website didn’t work for dumping anymore… trying to book one on their website, it won’t let me anymore…

    It says once you reach your original destination, you need to plot another trip or something like that…

  2. Whenever somebody tries to tell me I am taking advantage of the airlines’good will by churnining credit cards or hawking for a mistake fare. I will point them to this article.

    Thanks

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