Air carriers and cruise lines defend fuel surcharges

Fuel surcharges imposed by airline and cruise companies appear to be here to stay, despite a recent downward trend in the price of oil.

Over the last 12 months, air carriers and cruise lines have added fuel surcharges and new transactional fees, citing the need to recover expenses caused by the record-high price of fuel. But customers see that the current price of oil is much lower than it was earlier in the summer when some of the most recent surcharges were imposed.

Earlier this past week, oil prices fell below the $100 per barrel mark for the first time in more than seven months – a gradual decline that has seen almost $50 come off the per-barrel price since it peaked in July at around $147.

In November of 2007, cruise lines introduced fuel surcharges as the price of oil was nearing $100 a barrel. In June of this year, Royal Caribbean was the last of the major cruise line to announce a fuel surcharge increase, when it raised its daily charge to $10 per passenger. “We continue to see considerable volatility in fuel price movements around the world and believe it would be premature to lower the supplement at this time,” a spokesperson for the cruise company stated.

A Carnival cruise line spokesperson, Tim Gallagher, explained that the fuel prices that cruise lines pay haven’t dropped as quickly as oil prices: “Our fuel prices for the ships don’t drop nearly as fast as oil does, but they sure seem to go up every time there is a spike.”

Major airlines in the U.S. are also reluctant to cut the surcharges that they have recently introduced. They are not going away because the airlines are greedy,” commented Henry Harteveldt, a Forrester Research travel analyst. He noted that the cost of jet fuel is still as much as 50 percent higher than it was just a year ago.

www.forrester.com