Your vacation could cost you more because of the price of…

Even if the price of oil starts to come down, your vacation could cost you more this year. Several airlines have announced price increases for new bookings. What if you had already booked your trip with an agency? You are not safe, as surcharges could apply subsequently.

Since the start of the war in the Middle East a month ago, the price of kerosene has doubled, reaching US$4 per gallon on average last week in North America, according to the US Energy Information Administration. We have not seen prices this high since Russia’s invasion of Ukraine in the winter of 2022.

The stakes are high for carriers since fuel represents around a quarter of their costs. Result: airlines have already announced that they will impose surcharges for new reservations. This is particularly the case for Air Canada Vacations, Air Transat and WestJet. Surcharges are generally around $50 per person, but vary by carrier and route.

Thanks to the ceasefire announced at the start of the week, oil prices have fallen. However, they remain much higher than at the start of the year. Even if the geopolitical situation were to resolve, prices could take some time before returning to normal, several experts warned.

Price increases even after purchase?

For the moment, the price increases announced by airlines only apply to new reservations. If you had already booked directly with the carrier, the price of your reservation cannot increase, indicates the Consumer Protection Office.

But be careful, if you have done business with a travel agency, the price of your ticket could be changed if your trip is planned in more than 30 days. On the other hand, if your departure is planned in less than 30 days, the price of your plane ticket cannot be changed.

Two conditions allow a price change: an increase in the price of fuel and an increase in the exchange rate. In order for the price of your trip to be changed, your purchase contract must include a clause to this effect and the travel agent is required to inform you. Additionally, if the price of your trip increases by 7% or more from the original price, you can request a refund or exchange for a similar trip.

Until now, several travel agencies surveyed by Duty indicated that they had not had to increase their prices for plane tickets already sold. This is the case for CAA-Québec, Traditours and Groupe Voyages Québec.

“Airline tickets already booked are not affected at this time. A few small river cruise companies in Europe have sent us notices of increases for May and June departures, in the order of $100-125 per person. But they are small local players, not big cruise lines,” underlines Sébastien Forest, president of Traditours.

Surcharges, the bulk of the bill

Fuel surcharges are not new. Some airlines have been using them since at least the early 2000s. “In a way, it has always existed,” explains Mehran Ebrahimi, professor specializing in aeronautics at the University of Quebec in Montreal. “The only thing that has changed is the responsiveness of these adjustments. […] The variation in fuel cost will be instantly reflected in the price. HAS”

That said, not everyone is affected as quickly. Some companies have long-term contracts with kerosene distributors, notes the professor. “These companies are protected, if you like, from this kind of price variation. » Others instead buy their fuel at today’s price and immediately suffer the consequences of a price increase.

Surcharges are imposed in addition to the price of the portion of the ticket attributable to the flight. For example, Air Canada recently sold a round-trip ticket between Montreal and Geneva for mid-June for $955. The airfare represented only 13% ($126) of the total amount, while taxes ($139, 15%) and surcharges applied by the company ($690, 72%) made up the majority of the bill. “The objective is that the increase due to the overload does not appear much in the eyes of customers,” underlines Mr. Ebrahimi.

Moreover, fuel surcharges were renamed “carrier surcharges” a little more than a decade ago in order to circumvent requirements from American regulatory authorities, reported at the time Wall Street Journal. This catch-all term includes various surcharges, and carriers do not explicitly display the portion of these charges that is attributable to the price of fuel when booking.

Mehran Ebrahimi, however, is reassuring about the effects of these overloads in the long term. Carriers have an interest in adjusting passenger bills – including downwards – when the cost of inputs changes. “It’s a question of competition. The proof is that the cost of plane tickets does not increase over time. HAS”