At the moment, airlines are in a really tough spot, given the impact that higher oil prices are having on their operating costs. The issue is that the cost of airfare isn’t based on the cost of providing transportation, but instead, it’s determined based on what consumers are willing to pay, which is why many tickets are sold at a loss.
So generally speaking, the upside or downside of fluctuating oil prices is a risk for the airline. That’s not the case at every airline, though, as flagged by PYOK.
Volotea adjusts ticket costs based on fuel costs
Spanish low cost carrier Volotea has what it refers to as its “Fair Travel Promise.” When you book a ticket, you’ll see the following warning about how you could be charged an extra €9 per flight around seven days before departure, based on the cost of oil:
We all hope the situation in the Middle East will stabilize soon. Until then, we’re here to make your travel a little easier.
- At Volotea, we believe in total transparency to our clients. Instead of including fuel costs in your fare, we base them on real market price.
- 7 days before departure, we will review the fuel price and, if needed, we may adjust your ticket price. If prices increase, we may charge up to a maximum of €9 per passenger, per flight. If prices go down, we’ll refund you the difference.
- And because we know plans can change, we offer you full flexibility for free. You can change your flight, if needed, or cancel it for any reason and get refunded in Volotea credit up to 4 hours before departure. Read more about this policy in our Conditions of Volotea‘s Fair Travel Promise.
To expand on that further, if you look at the contract of carriage, you’ll see the following listed:
In the event of extraordinary variations in fuel prices affecting international energy markets, Volotea may apply a limited and temporary adjustment to the ticket price prior to the scheduled departure of the flight.
Any such adjustment will be calculated in accordance with the methodology, thresholds and limits published on Volotea’s website.
Passengers will be informed during the booking process of the methodology applicable to any adjustment resulting from increases or decreases in fuel costs, which may lead to a corresponding increase or decrease in the price of their Ticket. The exact amount of any such adjustment will be communicated to passengers prior to departure, once the applicable fuel cost variation has been determined. Such adjustments will only apply to passengers who have been informed of this possibility during the booking process, allowing them to make an informed decision before completing their purchase.
By completing their purchase after being informed of the possibility of any adjustment to the Ticket price, passengers acknowledge and accept that such adjustment may be applied and authorise Volotea to charge any corresponding increase, or reimburse any decrease, using the same payment method used to purchase the Ticket.
What an unusual policy for an airline to have
Airline pricing is incredibly complex, and I’m not going to argue that it’s terribly rational in the first place. But the idea is that pricing is determined by what the market will sustain based on supply and demand, rather than based on the cost of providing a particular service. It’s the reason that a flight on a particular route will typically be more expensive during “peak” season rather than during a quieter time of year.
So if an airline wants to tell passengers that their ticket cost will be based on the cost of providing the service, there’s nothing wrong with that, in theory. The question is, how is this really being measured? Up to €9 can be added per flight, but what is the exact amount based on? What price of oil per barrel is included with the “standard” fare?
I love the suggestion that the airline can adjust fares up or down based on oil prices — I’d be curious to know how often the airline has proactively emailed customers to offer them a refund a week out, due to falling oil prices. 😉
Bottom line
Spanish airline Volotea has a unique pricing system, whereby the airline reserves the right to add an extra fee for fuel after passengers book. Specifically, seven days before departure, the airline can charge up to €9 to account for higher oil prices.
For an industry where pricing isn’t based on the cost of actually providing the service, this is a unique concept that I’m sure is controversial among passengers.
What do you make of Volotea’s “fuel cost adjustment” policy?
