The Daily Telegraph - Saturday - Travel
Ukraine crisis may send flight costs skywards
A surge in oil prices could push up the price of your next holiday. Nick Trend reveals how to avoid paying any extra
How might the Ukraine crisis and soaring fuel costs affect the price of your holiday? One of the big advantages of booking with a tour operator is the security it gives you if the company goes bust – but compared with those who book independently, you have less protection against price rises. Tour operators have a legal right to charge you extra for your holiday if their costs go up – not just by putting up prices, but by sending you an additional bill, even after you have booked and paid.
That wouldn’t happen in the same way if you bought an airline ticket and arranged your accommodation separately. Airlines do not surcharge after a ticket has been paid for; both BA and easyJet confirmed this to me. And while it is true that you might pay more than you expected for accommodation if the pound fell before you paid, at least once you have handed over the money, the deal is done.
This year, with the appalling situation in Ukraine and Russia causing a surge in oil prices, the risk of surcharges has leapt. Oil prices directly affect the cost of aviation fuel which constitutes 30-40 per cent of the total operating cost of a flight. The cause is obviously different, but the situation is comparable with the last time there was a major round of surcharges. In 2008, as the credit crunch began to hit, jet fuel prices nearly doubled in a year. Virtually all travel companies put prices up and at least 20 imposed retrospective surcharges on customers.
Under UK law, however, there are strict rules about how and when an operator can put up the price after you have booked. Reasons are limited to a drop in value of the pound, higher taxes and increases in fuel costs. If any surcharge is higher than eight per cent of the holiday cost, you have the right to cancel for a full refund, and no surcharges are allowed within 20 days of the departure date. (If the company is a member of Abta, it must absorb the first two per cent of any increases.) But even these rules mean you could be charged an extra £400 on a £5,000 family holiday and have no choice but to pay up.
So how likely is that? Most airlines hedge against rising fuel prices which should militate against the problem. (This works only in the short term, of course; next time they have to hedge, it will cost more.) Some operators guarantee not to surcharge (see below), but others are keeping their options open. Britain’s biggest, Tui, said it hadn’t made any surcharges but wouldn’t commit further on the issue beyond saying it is committed to offer best value, will always follow Abta guidelines and will keep the situation under review.
What will certainly happen in the longer run is that, if fuel prices stay high, airfares – and so holiday prices – will go up. But for how long is less sure. If we look back to 2008, we had a year of soaring prices and surcharges but by 2009, the oil market had slumped and the cost of aviation fuel had more than halved. It is much harder to be sure of the consequences of the current situation, but there are things you can do to protect yourself financially.
HEDGE YOUR OWN HOLIDAY COSTS
Choose a company which guarantees not to surcharge. For example, easyJet Holidays told me it has “no intention of applying surcharges to bookings” and Trailfinders said it had always had a nosurcharge policy and that this will continue to be the case.
If you are paying for your flights separately, book now – before airfares increase further.
If you want a package holiday, booking within three weeks of departure will guarantee there can be no surcharge – though bear in mind that this doesn’t stop the selling price going up in the meantime.
Stay close to the UK – long-haul holidays are at greater risk of surcharges because flights use so much more fuel.