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Anita Dunham-Potter
11-12-2007, 12:02 PM
Hi Everyone,

Just a little note to let you all know I truly appreciate the feedback and insight you all provided for today's cruise fuel surcharge story.

This is what makes Tripso so special compared to other travel sites; we listen and we think what you have to say is important.

Again, thanks for your insight and keep posting your thoughts!

Best,
Anita

Ned
11-12-2007, 12:36 PM
Anita, I hadn't given you feedback on the article yet, so I'll say now that time and time again your articles are great, thoughtful, well researched and well written, and this one is no exception.

I agree with Julie Blackman, quoted in your article. I think the fuel surcharge ought to be added to the fare and call it a day. It's not like we're going to see fuel prices retreat back to 1995 levels, or even 2006 levels. These high fuel costs are here to stay, so the fares should just be upwardly adjusted. Plus adjusting the fare is not going to stop anyone from booking a cruise.

Loonbeam
11-12-2007, 01:30 PM
I think the key point here is the surcharges are non-commissionable, where fares are. Assuming an average boat size of, lets say, 1500, and an average charge of $6 per day, that's $9,000 per ship, per day they don't have to pay commission on.

I have no idea what kind of commissions TAs get but at one percent, thats at least $20k per year less per ship that they pay out and are therefore profits.

weblet
11-12-2007, 01:32 PM
I think the key point here is the surcharges are non-commissionable, where fares are. Assuming an average boat size of, lets say, 1500, and an average charge of $6 per day, that's $9,000 per ship, per day they don't have to pay commission on.

I have no idea what kind of commissions TAs get but at one percent, thats at least $20k per year less per ship that they pay out and are therefore profits.
By George! I think Loonbeam's got it!

Ned
11-12-2007, 01:57 PM
I fully understand the profit motive, but speaking strictly as a cruise consumer, I prefer a single price for a cruise fare, with no add-ons, other than optional shore excursions.

I refuse to believe that behind the scenes, the cruise lines couldn't say to the TA's, should they want to continue to not pay commissions on such things as port taxes and so-called fuel surcharges, that they can't put their fares in a two column spreadsheet; Column A commissionable, Column B non-commissionable. In other industries this is done all the time.

For example, in the chemical industry, they often have to give a group of customers delivered prices, yet salesperson commissions (usually a percentage in that industry) are based solely on the underlying price, without the freight. There are many other examples of the same.

Kairho
11-12-2007, 02:30 PM
Except, Ned, in travel governments often prescribe how prices are quoted and in many cases it is the total price which must be quoted. Taxes, fees, freight, etc. are often not cleanly and clearly broken out. Indeed, in some cases such as the nebulous port taxes, they are not even enumerated.

Another factor is that travel resellers often put pricing into expensive printed brochures with a long shelf life. Thus, pricing must be constant over that period and there is no freedom to change prices periodically as one would find in a bulk commodity industry. But contracts with suppliers allow for ad hoc surcharges. As pricing cannot be changed, surcharges are indeed kept as separate line items.

Unfortunately travel pricing is a lot more complicated that cost and markup, with all sorts of legal, political, economic and practical issues attendant.

Ned
11-12-2007, 02:39 PM
Thanks for the illumination K.

Except, Ned, in travel governments often prescribe how prices are quoted and in many cases it is the total price which must be quoted. Taxes, fees, freight, etc. are often not cleanly and clearly broken out. Indeed, in some cases such as the nebulous port taxes, they are not even enumerated.

Another factor is that travel resellers often put pricing into expensive printed brochures with a long shelf life. Thus, pricing must be constant over that period and there is no freedom to change prices periodically as one would find in a bulk commodity industry. But contracts with suppliers allow for ad hoc surcharges. As pricing cannot be changed, surcharges are indeed kept as separate line items.

Unfortunately travel pricing is a lot more complicated that cost and markup, with all sorts of legal, political, economic and practical issues attendant.

Loonbeam
11-12-2007, 04:15 PM
Okay, in all fairness the brochure thing had not occurred to me, but does make a certain amount of sense.

That said, I still think they should be fuel hedging.

NW CTC
11-14-2007, 12:27 AM
Anita - I enjoyed the column and really appreciate that you've shed some (public) light on the subject.

I think it's important for the cruise lines to get some feedback on these surcharges and your column helps keep the topic front and center.

Thank you! - J