Question: I rented a car from Hertz in Miami a few months ago. Before returning it, I filled it up with gas. When I turned the car in, I double-checked the fuel gauge, made sure my receipt reflected that the car had been returned full, and, thinking I had myself covered, flew home.
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When Sylvia Dawson tried to book airline tickets from New York to London for a group traveling next month, she was taken aback by the fare.
“We were told by Virgin Atlantic that there would be a fuel surcharge of $98 per person,” she says.
Dawson isn’t a novice who would be shocked by news like that. She’s a travel agent who specializes in tours to England, and books a lot of flights over the pond. The reservation was for a group of 20 clients headed to the U.K. on a tour.
“We know that the price of oil has skyrocketed,” she says. “But this group has been booked with Virgin since the beginning of the year. It seems that the increase is somewhat over the top.”
Worse, her group couldn’t pull out of the trip without incurring heavy penalties. The airline had them over a barrel, figuratively speaking. Either they would pay 14 percent more for the price of their tickets or lose their vacations.
Fuel surcharges are a peculiar thing. On domestic flights, the price of fuel must be included in the base fare quoted to passengers. But international flights aren’t regulated the same way, and an airline can quote a low base fare but then add a “fuel surcharge” later.
Is Virgin Atlantic out of line?
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When Walter Nissen signed up for a British Airways Chase Visa card recently, he thought he’d be jetting off to London after earning just 50,000 miles.
He overlooked one little detail: A glance at the fine print revealed he’d have to pay an extra $400 in fuel surcharges.
“We’re not talking a few dollars for mandatory government taxes and fees,” says Nissen, a computer scientist from Livermore, Calif. “Their secret surcharge goes right into British Airways’ pocket. That’s dishonest in my book.”
Here’s a question I’ve been getting a lot since the beginning of the year: Are the current round of airfare hikes justified?
Sure, energy prices are rising with the turmoil in the Middle East. Jet fuel prices are up more than 50 percent from a year ago.
But don’t airlines hedge their fuel purchases? (Hedging allows airlines to pre-pay for their fuel, offsetting the risk of higher prices.)
With airline ticket prices up by an average of more than $50 since the beginning of the year, are carriers just trying to cover their increased costs — or are they exploiting our expectations that ticket prices will rise, when, in fact, they have no reason to?
At least not yet.
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If you’ve ever asked yourself, “What will they think of next?” then here’s one possible answer: How about an airline ticket price that rises or falls with the price of fuel?
Sound far-fetched? Yes, but that isn’t stopping Allegiant Air from proposing it. Buried deep within a recent letter to the Transportation Department (PDF), the no-frills carrier drops a bombshell.
“Allegiant is considering a new pricing option for use on its website,” writes its chairman, Maurice J. Gallagher, Jr. “When making a purchase, consumer would be able to choose between a traditional “locked in” fare that would not fluctuate, and a lower fare that could change before the date of travel. That lower fare could be reduced further or could increase (up to a set maximum that would be clearly disclosed) depending on changes in fuel price between the booking and travel dates.”
In other words, Allegiant is prepared to offer you a cheaper ticket if you assume the risk of fluctuating oil prices. If energy prices rise, so does the cost of your transportation. If they fall, you could save money.
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The Bureau of Transportation Statistics has some fresh numbers this morning that suggest airlines are no longer spending a fortune on fuel. Last August, domestic carriers spent an average of $2.02 per gallon on fuel — up from $1.90 a gallon the previous month, but down dramatically from the $3.54 in August 2008.
Given that fuel prices — which, after all, were the excuse for adding more fees — seem to be under control, what’s wrong here?
Why are carriers like Southwest posting losses?
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… gas prices. By a long shot. At least according to our friends at Access America, who poll travelers every quarter about their travel-related anxieties.
Even airline service and security — two hotbutton topics on this blog — fail to come close to travelers’ gas problems.
So what?
Maybe the travel media (and I include myself in this group) needs to take a hard look at the way it covers the Recession of 2008. It is — and I want to be careful not to overstate this — obsessed with planes.
Travelers aren’t. They are concerned about cars. They worry about high fuel prices.
Travel news outlets aren’t doing their audience any favors by pretending their readers, viewers and listeners fly everywhere.
