Millions being made from fuel supplements – TravelMole Comment by Jeremy Skidmore

Fuel prices are rising and there’s been panic at the pumps, so travel companies have to levy surcharges, don’t they?

Behind the smokescreen, some firms are making millions of pounds out of the extra charges.

For this summer, many tour operators secured fixed contracts with independent airlines. You may struggle to find anyone in the industry that will admit to that, but it’s a fact.

So, some of the fuel surcharges levied in 2005 were totally unjustified and went straight to the bottom line of tour operators.

Isn’t that fraud? It’s a good job I haven’t named names.

Why didn’t these operators simply increase the base price of their holidays? After all, you can charge £20,000 for a week in Benidorm, if you can find anyone stupid enough to pay the price.

The reason is that these operators are in a highly competitive market, often promising to be cheaper than their rivals. If they charge x and then quietly slip in a fuel surcharge of £20 per person, they’ll sell a lot more holidays than if they’re upfront and say the price is x plus £20.

In other words, they’re distorting the market, by finding a sneaky way of selling a lot of holidays at a higher price than the market can bear and pocketing the profits, thank you very much.

Many operators have also secured fixed contracts for next summer, but that won’t stop another raft of fuel supplements.

The scheduled airlines are a different case. British Airways and Virgin Atlantic have raised fuel surcharges five times in the past 18 months and the supplement is now £60, up from £48, per return flight.

Their costs have undoubtedly risen and it is unfair to accuse them of blatantly profiteering in the same way as some operators have done. But, shouldn’t the airlines include the charge in a higher headline price, instead of trying to lure people with a low fare and lots of extras?

When you add in other charges, you can now pay taxes of up to £167 on some long-haul flights. That is surely wrong.

As Simon Evans of the Air Transport Users’ Council said, people are going to get fed up of being charged £100 for a fare and finding that they’ve really got to pay £200.

There are also other questions to be asked.

Has the price of oil gone up by the same percentage as the increase in the fuel supplements? Will the airlines put the fares down when the price of oil falls? And why isn’t the size of the fuel supplement dependant on the length of the flight? Surely the supplement to Sydney should be greater than the one to New York.

Meanwhile, Ryanair makes a big song and dance about not charging fuel supplements. True, it has behaved impeccably over the issue, putting any price increases in its headline fares. But it does charge extra for airport taxes and for bookings by credit card.

The Office of Fair Trading isn’t interested in the size of fuel supplements charged by operators and airlines, saying that it is a commercial decision and, provided the full cost is made clear to the consumer, no offence has been committed.

But is it any way for travel companies to behave and doesn’t it just add to the public’s perception that this is a cowboy industry?

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