TokyoTomo Travel Guide

Fuel Surcharge Team, formed recently at Japan Association of Travel Agents (JATA) and headed by Councilor Jun Ishiyama, is moving to frame the thoughts of travel agencies toward the unified opinion that fuel surcharge should be included in the travel products in consideration of consumers’ sentiment.

All the member companies comprising the team do not agree on the comprehensive pricing method yet, but they feel the need to dispel consumers’ mistrust in any possible manner. After a series of discussion on this matter from various standpoints of company executives, tour planners, and retailers, the team will determines the direction to proceed by the end of January 2008.

It submits a proposal in late February and is supposed to have meetings in March with Ministry of Land, Infrastructure, and Transport (MLIT), airlines, and Japan Fair Trade Commission.

The team is working to propose comprehensive pricing to include the surcharge. JATA had earlier conducted a survey on this issue with travel agencies giving them four options, i.e. (1) to waive the surcharge on the part of airlines, (2) to denote the amount on the ticket alongside the authorized fare, (3) to price travel products in a way to include the surcharge on agency side, and (4) to build the surcharge into the fare system, From the viewpoint of package tour sales, the comprehensive pricing method was supported unanimously.

However, the risk remains with package tour operators in this case because they must absorb any future hike of surcharge and face a complicated problem of sales commission payment. Therefore, some of those who are in favor of the method append a note to say such a method would be feasible only under certain conditions or that it might be a bit unrealistic.

One of the possible remedies would be to request airlines to review the surcharge only when it is in time for the travel agencies to merchandise travel products for the next season.

In view of travel agencies’ difficult situation in dealing with customers, JATA once saw eye to eye with MLIT on the revision ofsurcharge amount once every six months, but it did not take effect after all. This time, being more considerate of consumer sentiment and reaction, JATA seeks a solution that could wipe out consumers’ mistrust and clarify murky fare construction, which otherwise would be detrimental to the government’s policy of expanding overseas travel market.

At the stage of introduction, it was assumed from consumers’ perception that they could concede a charge of 500 yen to 2,500 yen for a portion, but now they claim the current level is too high, thus the surcharge becoming an impediment to the market growth.

It happens that after a customer makes a contract to buy a travel product, he or she is often charged more than initially agreed because of an unexpected revision of surcharge amount. This is something that consumers do not feel happy about and they even label the agency as a fraud. With regard to the controversy on oil surcharge issue, JATA maintains that fare structure has not been fully accounted for up to now and the airlines are held responsible for it.

The way to price travel products in lump sum is a sort of solution to overcome the existing problem, but it may trigger a new round of price war among travel agencies even at the sacrifice of the surcharge revenue, which is another risk for the agencies.

On the other hand, MLIT issued an official letter saying that fuel surcharge is a mandatory cost of travel that travelers have to pay but does not constitute a part of travel expenses payable to travel agencies. The letter implies it is a necessary cost item comparable to the Passenger Facility Charge at the airport, but it remains to be defined more precisely. For that matter, travel agencies are said to be discussing their own role of providing consumers with timely and convincing explanation.

Source: Travel Vision

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