I am booked on a package holiday from Palma in November and despite everything having been paid for, yesterday I was informed that the airline has slapped a 78 euro surcharge on the flight prices due to the increase in fuel prices and there is nothing I can do about it buy pay.
The Balearic Islands Travel Agents’ Business Association AVIBA explains that package holidays may be subject to justified price adjustments, whilst airlines cannot add fuel surcharges to tickets that have already been purchased.
Having a holiday booked does not always mean the price is final. Rising fuel costs may affect certain package holidays if the contract allows for this possibility and the legal requirements are met. This is different from the individual purchase of a flight ticket, the price of which cannot subsequently be increased by means of a fuel surcharge.
The president of the Balearic Islands Travel Agents’ Business Association (AVIBA), Pedro Fiol, explains that these price adjustments are causing concern amongst those who have already organised their holidays.
“Customers book within a budget, and any subsequent increase places an additional financial burden on them. It is us, the agencies, who have to face the customers, and we need sufficient information to explain what is being charged and why.”
International instability and its impact on fuel prices have put further pressure on holiday bookings, which can be made months in advance. A recent example is a package holiday to Egypt with departures in November, for which a surcharge of 78 euros per person has been announced, covering two international flights and one domestic flight.
According to the information sent to the agency, the fuel benchmark used to update this package rose from the $800 per tonne stipulated in the contract to an average of $1,550 in September. The difference amounts to 93.75 per cent in relation to that fuel benchmark, not the total price of the trip. In this case, the wholesaler has also stated that it is absorbing part of the additional cost.
Fiol explains that operations involving charter flights or seats booked by a tour operator may include adjustment mechanisms. “Financial terms are agreed in advance and a fuel forecast is used. If this changes, an adjustment may be made, but it must be provided for and documented. It is not enough simply to quote a figure.”
By contrast, for a scheduled flight ticket purchased individually, the airline cannot subsequently claim a fuel surcharge. The European Commission expressly reiterated this principle in May: airlines must disclose the final price at the time of purchase and cannot add such surcharges afterwards.
The Volotea controversy highlighted this difference in the months leading up to the summer. The airline introduced a mechanism allowing it to adjust the price after booking based on fuel costs. Ultimately, it announced the withdrawal of this policy for new bookings made from 10 June onwards.
“On scheduled flights, price increases can be passed on to new bookings. This may mean that those booking later face higher fares, although demand, available seats and commercial policy also play a part,” notes the president of AVIBA.
In the case of a package holiday, Fiol believes that applying a common review criterion can distribute the increase more evenly amongst the travellers affected. However, he insists that this option does not allow for any surcharge to be applied automatically.
The regulations governing package holidays require that the contract expressly provide for price revisions, explain how they are calculated and also recognise the right to a reduction should costs fall. The increase must be communicated, together with its justification and calculation, in a durable medium, no later than twenty calendar days before the start of the trip.
Nor is 8 per cent a legal maximum. If the increase exceeds that percentage of the total price of the package holiday, the traveller may terminate the contract without penalty. Falling below this threshold does not exempt the provider from complying with the other requirements. Within the final twenty days, any further price rise may no longer be passed on to the customer via this price adjustment. How the cost is shared between the airline and the tour operator will depend on their agreements.
“We ask that the justification and calculation be provided to us in writing and in good time. The traveller has the right to understand where every euro they are being charged comes from and what their options are,” says Fiol. “And that same transparency must apply when fuel prices fall.”