The first of what could be several fuel charge-related lawsuits against the cruise lines was filed earlier this week in Miami. Coral Gables, Fla., attorney Harley Tropin submitted the complaint, which seeks class action status, on behalf of New York resident Jason Ablelove. It charges several large cruise lines, including Royal Caribbean Cruises Ltd., Carnival Corp. and Norwegian Cruise Line, with colluding to fix unreasonably high fuel surcharges.
I contacted Tropin yesterday to request a copy of the complaint and to speak with his client. Ablelove was out of the country and couldn’t be reached, but Tropin was kind enough to send me the lawsuit. It’s devastating, and the cruise lines would be smart to settle this one quickly and make nice with Florida’s Attorney General, which is investigating whether Royal Caribbean and Carnival Corp. properly disclosed fuel surcharges.
According to the suit, anyone who purchased tickets after Jan. 1 from the cruise companies paid an unreasonably high fuel surcharge illegally set by the companies. Here are a few highlights:
The Fuel Surcharges were unprecedented in the North American market. In large part, this is because of a 1997 settlement between certain Defendants, including Carnival and Royal Caribbean, and the Florida Attorney General.
Pursuant to that settlement, these Defendants paid a fine and agreed to revise their advertising policies to settle allegation that they misled consumers about cruise costs. Under the settlement agreement, the cruise lines could no longer charge customers any fees in addition to the advertised initial ticket price, except those fees actually passed on by the company to a government agency.
Defendants, despite their prior settlement with the Florida Attorney General, concertedly and deceptively implemented a fuel surcharge herein described.
The suit also notes the suspicious timing of the fee implementation and suggest the cruise lines were working together:
On November 5, 2007, Carnival Corporation announced a fuel surcharge of $5 per person per day … shortly before [then] the smaller luxury operator Regent Seven Seas Cruises announced that it would implement a fuel surcharge of $7.50 per person, per day, for its 2008 sailings. On November 12, Oceana Cruises announced it too would implement a $7 per person, per day surcharge … on November 14, Silversea Cruises announced a $10, per person, per day surcharge … etc.
That’s a violation of anti-trust laws, the lawsuit says.
Defendants engaged in a continuing agreement, understanding, and conspiracy in restraint of trade to artificially raise, fix, maintain and/or stabilize the price of Fuel Surcharges in the United States and throughout North America in violation of Section 1 of the Sherman Act, 14 U.S.C. 1.
They’re also a violation of Florida state law:
Defendants’ misled, and continue to mislead consumers into believing the Fuel Surcharges are proportionately related to their fuel costs. Rather, these Fuel Surcharges are the result of unlawful concerted action among the Defendants.
Finally, it suggests that cruise lines were not acting alone. It names several “unnamed co-conspirators.” Whether or not those are travel agents, who helped collect these fees, is open to debate:
On information and belief, certain cruise line operators, trade groups and/or other entities, unnamed herein and referred to as John Does I-X, willingly conspired with Defendants in their unlawful conduct at all relevant times. The allegations contained herein against named Defendants are hereby averred against these unnamed co-conspirators.
I’ve noted the troublesome nature of cruise line fuel surcharges in the past. Personally, I think it’s only a matter of time before the cruise lines cave in and send everyone a rebate check.
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{ 5 comments… read them below or add one }
Personally, after reading about this the first time around, I was just waiting until this came about.
At this point it seems that travel companies (air & sea) can do whatever they feel like doing to increase their profits, as far as surcharges. How is it consumers are still paying for the increases while the travel companies increase their profits. Every surcharge that comes out is split 50% to the actual surcharge and 50% to increase company profits.
Thankfully, at least this time, there was something consumers could do to reverse such surcharges.
If the cruise lines get away with this,what happens if you start to board for your cruise and are ask to pay and extra $ 100.00 for no reason at all. I thought about Pirate’s during baseball season not on a family vacation !
I suppose you have to admire the strategy in a way. The cruise lines didn’t want to have to roll those additional costs into their actual fares, which would bring the sale prices of cruises up above what customers have come to expect in recent years. For instance, a 7-day cruise that normally costs $699 would instead cost $769 plus taxes and port fees. By adding it as a surcharge, separate from the cruise fare, it just seems like another add-on, and cruise lines don’t have to advertise higher fares than before.
If you think about it, the cruise lines probably thought they all had to use this method of cost increase just to stay competitive with each other. Cruise lines have always touted crusing as an “affordable” way to vacation, particularly for families. However, this method of deceptive pricing was very foolish on thier part. The smartest thing one of the cruise lines could have done would be to up their actual fares slightly, and promote the fact that they weren’t adding these dubious “surcharges”. Because all of them did it within such a short timeframe, it would be tough to believe there weren’t back channel discussions going on between the different companies, particularly when multiple cruise lines are now owned collectively by larger parent companies.
There was, in early 2007, a very similar investigation into fuel surcharges being tacked on by various railway companies. The Surface Transportation Board issued a decision that railway companies couldn’t charge fuel surcharges that did not accurately reflect their actual cost increases.
“Our decision today brings common sense and fairness to the railroads’ implementation of fuel surcharges. This new rule will preclude them from selectively imposing surcharges in a manner that bears little relationship to actual fuel use. It will also remove the possibility that railroads will view fuel surcharges as a profit center.”
There’s no doubt that the cruise lines can use these fuel surcharges as a profit center, and a highly lucrative one at that. It would also be interesting to research how much cruise fares have risen in the last couple of years. If the numbers are significant, the cruise lines could even be guilty of “double-dipping”……raising fares to cover their actual increased fuel costs, and then adding a big fat fuel surcharge on top like a cherry on a sundae.
Okay, I have to revise one part of my earlier comment. Apparently, Princess Cruises is doing exactly what I had suggested above. They are including the “fuel supplement” charge in the actual fare. Though I don’t think that exonerates them, since they began their fuel supplement charges around the same time everyone else did, and their rates are also $5 per day. Still smells like collusion to me, even if it’s a slightly different flavor.
I certainly don’t like to have ANY surcharges added to a price I was quoted for ANYTHING, and fuel surcharges for cruises or air lines are no different. The price quoted should be the price paid, and it should include all costs. However, many hotels call themselves “resorts” and charge a “resort fee” in addition to the daily room rate, supposedly to cover things like towels, in-room coffee, pool use, access to tennis and golf (even though there is an additional charge to actually PLAY tennis or golf), and even though other “non-resort” hotels, even of the same brand, don’t charge extra daily fees for those same amenities. We complain but the hotels just put those charges in their “terms and conditions”, leaving virtually no room for discussion if you want to stay at their hotel. As to cruise line collusion or anti-trust actions, that seems a bit of a stretch to me. When the airlines all raise their fares almost at the same time, no one yells “collusion”, and as frequently seen, once one rolls the fare back, the others usually do also.