More expensive fuel, more expensive travel – are passengers really required to bear the additional cost?
The ongoing conflict in the Middle East is disrupting energy supply chains, leading to increased transportation costs and reduced service availability. Against this backdrop, two key questions arise: can air carriers subsequently increase the price of airline tickets that have already been purchased in response to rising fuel costs, and what rights do passengers have where flights are cancelled as a consequence of developments in the fuel market?
As we have witnessed recently, there has been an escalation of the conflict in the Middle East. Iran has tightened its control over the Strait of Hormuz, one of the world’s most strategically important maritime chokepoints, through which almost one-fifth of global oil supplies are transported. These developments have also affected the aviation sector, as constrained oil supplies have been driving up fuel costs for air carriers. This raises questions about the extent to which passengers may be required to bear the consequences of higher fuel costs, as well as the rights and protections available to them under European Union law.
Generally, most air carriers secure their fuel requirements through long-term supply contracts, which means that any increase in ticket prices may not be immediately apparent. However, in the event of a renewed escalation of the conflict, air carriers are likely to face higher operating costs, which may ultimately be passed on to passengers through increased airfares.
Air carriers are generally free to set their own prices and may adjust fares to reflect changes in operating costs, but only before the airline ticket is purchased. This distinction is particularly important when considering whether an air carrier may, after a passenger has already purchased a ticket, subsequently impose an additional charge or require payment of a surcharge as a result of increases in fuel or oil prices.
Regulation (EC) No 1008/2008 provides, both in its recitals and in Article 23(1), that the final price of an airline ticket must always be disclosed and must include all unavoidable and foreseeable elements of the fare. Accordingly, once a ticket has been purchased, air carriers cannot subsequently require passengers to pay additional charges that were not included in the final price displayed at the time of booking. This applies to all airline tickets purchased for flights departing from airports located within the territory of the EU Member States.
The situation is somewhat different in the case of package travel arrangements, where a traveller purchases a combination of travel services, such as air transport and accommodation. Directive (EU) 2015/2302 permits organisers to increase the package price after the conclusion of the contract, provided that the contract expressly reserves that right. Where the increase does not exceed eight per cent of the total package price, the traveller’s consent is not required. However, if the increase exceeds that threshold, the traveller may either accept the revised price or terminate the contract without incurring any termination fee. Any price increase must be notified no later than 20 days before the commencement of the package. The same principle applies in reverse: where fuel prices decrease, the traveller is entitled to a corresponding reduction in the package price, provided that the contract contains a valid price revision clause permitting price increases. A traveller may seek such a reduction by notifying the organiser of the decrease in transportation costs resulting from lower fuel prices and requesting a recalculation of the package price together with reimbursement of any overpayment. The organiser, however, is entitled to deduct any actual administrative costs incurred in processing the refund. These rules apply to package travel arrangements offered within the European Union.
In the event of a fuel shortage or a significant increase in fuel prices, air carriers may decide to cancel flights. In such circumstances, passengers are protected by Regulation (EC) No 261/2004, which entitles them to choose between reimbursement of the ticket price, re-routing at the earliest opportunity (under comparable transport conditions, to their final destination), or re-routing at a later date (under comparable transport conditions to their final destination, at the passenger’s convenience, subject to seat availability). Passengers are also entitled to care and assistance at the airport (i.e. meals, refreshments, hotel accommodation, transport between the airport and the place of accommodation, access to telephone calls, messages, or emails). However, such assistance is limited to necessary, reasonable, and proportionate expenses in the circumstances.
Where a flight is cancelled less than 14 days before the scheduled departure date, the air carrier is also required to pay compensation, unless it offers suitable re-routing within the time limits prescribed by the Regulation or the cancellation was caused by “extraordinary circumstances” that could not have been avoided even if all reasonable measures had been taken. According to the European Commission’s interpretative guidance, such extraordinary circumstances may include a local fuel shortage, but do not extend to a mere increase in fuel prices. These protections apply to departing passengers from an airport located within the territory of an EU Member State, as well as to passengers travelling from a third country to an airport located within the territory of an EU Member State where the operating air carrier is an EU air carrier.
Although any further deterioration of the situation in the Middle East may significantly increase air carriers’ operating costs and contribute to higher airfares, European Union law continues to afford passengers a high level of protection.
