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April 2008    Download the Entire Issue (PDF) Available to the Public Vol. 23, No. 4   RSS Feed for Undercurrent Issues
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Oh, Did We Mention the Fuel Surcharge?

and can divers do anything about it, even if they paid in full?

from the April, 2008 issue of Undercurrent   Subscribe Now

Undercurrent subscriber Gari Sisk (Anchorage, AK) had been booked on a January 15 trip on the Thailand liveaboard Ocean Rover for more than a year. It wasn’t until January 7 when she got the e-mail stating she would be charged an additional $120 fuel surcharge.

Angry at the short notice, Sisk searched Ocean Rover’s Web site but saw no mention of a policy for increasing trip costs at a late date. Then she wrote a letter to Ocean Rover Cruises managing director Jeroen Deknatel. “I have been paid in full since mid-November and received no mention of a surcharge until now. Fuel prices didn’t change overnight, so why the late notice?”

Deknatel said, “Some time ago, we decided to review our options on January 1, 2008 and base our decision on the situation of that date.” Crude oil passing the $100 mark and the dollar’s plunge had an immediate effect, pushing Thai prices higher for companies selling in U.S. currency, he added. “This isn’t a case of trying to increase profit, it’s a case of reducing operational losses.”

While we too would be angry about Ocean Rover’s too-short notice, it’s not the only liveaboard adding or increasing fuel surcharges. Sisk’s situation is unfair but it’s becoming the norm, says Ed Perkins, contributing editor at SmarterTravel. com. He says that travel operators are in their rights to do that, though those rights should be fully disclosed before you make your purchase. However, you can “definitely expect some modest increases over previously published rates.”

Airlines add surcharges either by increasing the base fare or adding an additional fuel tax but as long as the total fare is advertised, it’s legal. At least they don’t charge retroactively, like Ocean Rover. Several Florida-based cruise lines started assessing retroactive fuel surcharges, even on cruises where passengers made deposits or paid in full, but the state’s Attorney General made them rescind that decision. Going forward, cruises are charging an average $5 per day with a cap of $70 per person.

As for liveaboards, some are eating the costs, while others are making divers pay a share. Divers booking January trips will have the most last-minute shocks because many dive boats officially announce increases at year’s end. Peter Hughes gave 14-day notice to divers about surcharge increases effective January 1. However, those who already paid in full didn’t have to pay it. Divers who paid in full by December 20 only paid the old fuel surcharge, while those paying after the 20th paid the new one. Aggressor president Wayne Hasson says, “Our surcharge is fixed, now we’re eating it.”

Dive boats are in a bind because they book customers years in advance but don’t know what fuel prices will be then. “We’re already pricing 2010 trips, so that’s why we keep charter fees and fuel surcharges listed separately,” says Peter Hughes vice president Larry Speaker. Hughes’ Web site always carries a caveat that fuel surcharges “are subject to change or may be added in any destination up until the date of travel.”

It’s not just the price of oil, it’s the taxes many countries add to it, says Speaker. “Galapagos put a new tax on diesel price -- it just changed one day with no notice. When governments change taxes with zero notice, that makes things unpredictable.”

Many travel operators carry a caveat in the fine print, such as, “We reserve the right to increase rates to compensate for unusual expenses.” But for Third World operators hiking prices with no warning, there’s little you can do. “Going to small-claims court against a Thai company won’t work,” says Perkins. “However, if your package trip was put together by a U.S. tour operator, then you may have some redress if their foreign subcontractors raise rates.” Some divers say they will refuse to pay tips to staff, but that just penalizes the wrong people.

Peter Hughes and Aggressor don’t intend to change or shorten itineraries. Instead, they’re finding little ways to lower fuel usage. Hasson says lowering a boat’s cruising speed from 18 to 16 r.p.m. during non-diving time can save 200 gallons of fuel. Peter Hughes is using one generator instead of two at night and reconfiguring engines to save fuel efficiency. “Conservation is on all dive operators’ minds, but little things can go a long way,” says Speaker.

As for Ocean Rover’s effort to avoid a financial loss by sticking the people who had already paid up front, they’ll now have to factor in the loss of good will.

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