Airlines Fall in Love with Fuel Surcharges All Over
Christopher Elliott, The Travel Troubleshooter
"We were told by Virgin Atlantic that there would be a fuel surcharge of
Dawson isn't a novice who would be shocked by news like that. She's a travel agent who specializes in tours to
"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?
Before answering, consider this: While crude oil costs more than
"The difference between the crude oil and jet fuel is called the crack spread which is more or less the market-driven price for refining crude oil into jet fuel," says
The average "crack spread" last year averaged about
Even by insuring against unanticipated fuel price increases by a practice called hedging, or paying for fuel up front at an agreed-upon price, it appears the domestic airline industry is headed toward a loss in 2011 unless jet fuel prices drop.
So no, Virgin Atlantic isn't out of line by trying to cover its fuel costs. But is it going about it the wrong way?
This isn't the first time Virgin's fuel surcharges have been questioned. Back in 2008, the airline and
Passengers don't expect airlines to run a charity by giving away tickets. But why not raise fares to cover the cost of the extra fuel? And why wait until the last minute to broadside them with a fuel surcharge?
Dawson's case was unusual, because it involved a group booking that hadn't been paid yet. Normally, tickets that are already purchased aren't subject to any kind of price increase.
I contacted Virgin on behalf of Dawson, and Virgin's group desk got in touch with her. It sent her new ticketing instructions, which had a lower fuel surcharge and taxes, and extended her ticketing deadline.
"It looks as if my group may be spared a lot of extra expense," she told me.
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(c) 2011 CHRISTOPHER ELLIOTT DISTRIBUTED BY TRIBUNE MEDIA SERVICES, INC.
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