There’s a lively debate in the blogosphere about when the travel industry will withdraw some of the fees imposed after fuel prices took off earlier this year. With energy prices on a downward trajectory, shouldn’t the surcharges be on their way out, too?
You would think so.
Matt Phillips at The Wall Street Journal’s Middle Seat Terminal raised the question yesterday morning in a post titled Will Fees, Fares Follow Falling Fuel Costs?
Fuel costs. That’s been the explanatory mantra among airlines cutting capacity, slowly increasing fares and slapping on fees in recent months. So if fuel costs fall, surcharges and fees should evaporate and fares should fall back to where they were over the last couple years, right?
Mark Ashley wondered the same thing. “With oil entering a bear market (a 20% correction from its peak), will we see some of those fees rolled back?” he wrote.
Rick Seaney is the latest to ask that question. He suggests there’s a “magic number” to which oil prices have to drop, where airlines would start “rolling back at least SOME of those ire-inspiring fuel-related fees and surcharges.”
The correct answer is: the fuel surcharges may ease — but the fees are here to stay.
As I’ve pointed out in several posts — here’s the latest one — airlines have always wanted to charge extra for pillows, blankets, soft drinks and reservations. They used higher fuel prices as an excuse to do so.
Why would they pull back now, when they’ve just begun to tap a new source of revenues?
I should note that virtually none of the blogging debate has dealt with the fuel-related fees on cruise ships, which are ridiculously high and could soon translate into pure profit. I wonder if the likes of Carnival and Royal Caribbean will face similar pressure to ease up on their fees?
So to anyone who believes the fees are headed toward the exits, I say: just wait. If anything, we will see more fees in the future, not fewer.
{ 4 comments… read them below or add one }
If these fees, whether airline, cruisline, rail line or bus line, really had to do with fuel, the carriers would have modified their contracts of carriage to provide that additional charges were payable on the day of departure if fuel prices at the point of travel were above a certain price. E.g. Carnival might say that if on the day of departure, marine diesel fuel at the Port of Miami is more than $X.XX, $X per passenger per day will be due at check in.
They haven’t done this because these surcharges are really about increasing ticket prices without increasing the commissions paid to travel agents etc.
Within days of the agreement with the Fl AG NOT to allow the cruise lines to charge fuel surcharges to previously booked customers, I noticed the port and tax line for my cruise go up over 70%. A blogger on cruise critic wrote the company and was told they had made adjustments to the port fee/tax line to more accurately reflect true costs — HOGWASH! Like the airlines, the cruise ships (at least RCI where I had booked), are just into gouging, and frankly, it’s time for another port fee/tax law suit to determine the accuracy of the claim. The timing was just too coincidental for my reasoning mind.
If I had just lost 2.7 billion in the last quarter for United alone, I might never lower my fares again. Think about it. They lost it and need to recover that lost…..quite franly, there is not one person in the industry intelligent enough to make it happen, but high travel prices are here to stay…….until the next $2.00 sale to stimulate travel. When they passed out brains, the industry say no thank you, I don’t need none.
Honestly, the other way for the airlines to recoup lost profits due to fuel prices is to increase airfare/. I’m sure many people out there don’t realize that before 9/11, tickets were double and triple what they cost now. Are people willing to pay double the price of their tickets these days? no way. so they are getting hit somehow. and rightfully so!
at least people have a choice to make when they ask for a pillow and take an extra bag on board.