When is a fare increase not a fare increase? When the airlines say
it isn't.
If nothing else, the saga of the "fuel surcharge" implemented
this month by the major carriers has underscored how confusing it
can be when you try to pass off a price hike as something else.
It all started last year when the Organization of Petroleum
Exporting Countries cut oil production in the wake of plummeting
prices. Oil prices steadily surged last summer and fall, and jet
fuel prices are now at a nine-year high. Wall Street analysts
expressed concern that fuel prices would eat into airlines' first
quarter profits.
Continental was the first to act. On Jan. 18, it announced a
surcharge of $10 one way and $20 roundtrip on domestic tickets
purchased for travel on or after Feb. 1. Most of the major carriers
quickly followed suit.
US Airways jumped on the bandwagon Jan. 21, then spent the
ensuing weekend torn between rescinding the surcharge or modifying
it. Concerned about the impact on walk-up business passengers and
competitive markets, the carrier instituted the charge only on
advance-purchase tickets and flights where it doesn't have to do
battle directly with low-cost carriers.
Meanwhile, the Department of Transportation notified the
airlines that they can't list a price increase as a surcharge in
ads or CRSs unless it is a government-imposed fee or tax. However,
the DOT said they can list it as a surcharge on the tickets
themselves.
That brought up the question of whether the surcharge is
commissionable. At press time, the carriers that had adopted the
surcharge were split on the commission issue.
The $10 or $20 increase means more to clients than to agents.
The question is whether this price hike will disappear when the
price of fuel drops again.
If it doesn't, call it a fare increase. But not a fair
increase.