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Queen Mary’s little gas problem

November 10, 2009

qm2When Mel McBeth and his wife booked a cruise on Cunard’s Queen Mary 2 last year, they weren’t expecting any additional charges. But that’s exactly what they got when the cruise line helped itself to another $180, which it claimed was a fuel surcharge, on the day they paid for their vacation.

McBeth was sure there wouldn’t be a fuel surcharge. On the day he booked his cruise, the price of light sweet crude for December delivery fell to $59.33 a barrel on the New York Mercantile Exchange — far below the $70 a barrel-level that would have triggered the charge.

Was the Queen Mary 2 having a gas problem?


Before I continue, let me be clear about my bias: Cruise lines have no business adding fuel surcharges to their tickets.

I can understand why they would have wanted to do that a few years ago, when fuel costs were going through the roof. But just a few months shy of 2010, it’s something they should have factored into their pricing. If they can’t, they shouldn’t be running a cruise line. Simple as that.

I suggested McBeth contact Cunard, asking it to adjust his fare.

On January 13, 2009, I wrote to Ms. Carol Marlow, President of Cunard Line, requesting a refund of the $180 I paid as a fuel surcharge. The reply I received stated “to be eligible for a refund of the fuel supplement the price of light sweet crude oil according to the New York Mercantile Exchange Index had to stay below $70 a barrel.”

I wrote her again that her arbitrary rule was wrong and that the price of crude at the time of my cruise was $59.33, well below $70 a barrel, and that I wanted a refund of the $180 I paid in September. She again refused.

Whey would Cunard deny what appears to be a completely reasonable request? I asked Cunard. Here’s what a representative told me:

As Mr. and Mrs. McBeth sailed on 11/29/2008, the Carnival Corporation and plc policy of which Cunard adheres to states that the NYMEX oil price for light sweet crude oil would have had to have been $70.00 or less per barrel every day between 10/20 and 11/24 (25 consecutive trading days ending 5 days prior to the voyage departure) in order for them to receive a fuel supplement refund ( which would have been in the form of an onboard credit).

In fact, the price did fluctuate above $70.00 per barrel on three days during this period:

10/20/08
10/21/08
11/4/08

And so, according to the above-stated policy, Cunard is not in a position to issue the requested refund.

I hope this clarifies the situation.

It does.

I think if Cunard had explained this to McBeth in the first place, then I wouldn’t have had to get involved. And of course I wouldn’t have needed to get involved if Cunard hadn’t done this to its customer.

Ideally, cruise lines would lose the fuel surcharges altogether. Customers can’t stand them. Travel agents must hate them, because they’re non-commissionable and put them in an awkward position with their clients. If nothing else, the $70-a-barrel trigger ought to be raised to a more reasonable $100, which, I think we can all agree, is a lot to pay for fuel.

What do you think? Keep the fuel surcharges — or can them?

(Photo: matt coats/Flickr Creative Commons)

Christopher Elliott is the author of Scammed: How to Save Your Money and Find Better Service in a World of Schemes, Swindles, and Shady Deals. Critics have called it “eye-opening” and “inspiring” — it’ll “grab your attention and won’t let go.” Order your copy now on Amazon, Barnes & Noble or iTunes.

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39 comments

  • GSA

    I hate fuel surcharges, I have paid them on 3 cruises now and am disgusted by it. I agree that it should be factored into the cost of the cruise, “the cost of doing business.”

  • Joe Farrell

    fuel surcharges should be based on actual price paid for their distillates. Remember- these companies hedge= and this cruise line has the financial ability to hedge.

    It would be much fairer if the surcharge was charged AFTER the cruise.

    Want REAL ‘fairness?’ -

    Create a BASE price for distillates = say $70/bbl = the target fuel surcharge is $70. We ‘unbundle’ the fuel surcharge from the fair. So the $399 cruise cabin has no fuel surchage when prices are $70bbl. We then charge according to the following scale –
    Under $40bbl – there is no fuel surcharge = customer gets $70 refund.
    $40-60/bbl – Customer gets a $20 pp refund,
    $60-80/bbl = its a wash – No refund, no extra payment – $70 fuel charge
    $80/bbl -$100bbl – an additional $20 /pp
    $100-$140bbl – $50 / pp surcharge on top of the $70 target

    This is fair and is tied to the indexed hedge price being paid the cruise lune. It also lets consumers pick a lower cost cruise company or one which has a lower charge because it is managed better – transparency benefits everyone.

    All the travel companies want to unbundle anyway – so lets encourage it so long as we get some transparency and some benefit for it.

  • Shirley Schultz

    My mouth dropped open at their statement that the price for oil would have to be steady for that long a period — in such a volatile market! This is a ruse. For the cruise lines, it’s the price of doing business. (Imagine if a cab driver pulled this in the middle of a fare!) If the travel industry as a whole doesn’t knock off some of this “nickel and dime stuff” they’re going to totally alieanate the leisure traveling public at a time they least need it. Get rid of this tactic. Put it in the full price of the fare, or forget it!

  • http://waynedayton.tripod.com Wayne Dayton

    This is definitely the primary reason why I will NOT cruise. This is an unethical business practise and the sanctimonius brush-off these clients received from the CEO was less than appropriate, showing how little their business was appreciated, i.e. IF it had been less, a shipboard credit would have been given meaning they still would have kept the money, not refunded it.

  • Jonathan

    Like your idea, Joe. Unfortunately, it’ll never happen. The cynical reason is that it won’t work because it makes too much sense. The realistic reason is that it makes too much money for them. Simply look at the BILLIONS that the airlines are successfully raking in and you’ll understand the entire logic behind why cruise executives have kept these fees in place well after the cost of oil went down. Personally, I think they’re an obscenity – other than airline tickets, I can’t think of a single thing out there that someone can purchase for an agreed-upon price and then have one party re-neg because they didn’t plan their business model well enough. Nothing will ever happen until cruisers stand up en masse and say enough is enough. Sadly, I foresee the Washington Redskins or Oakland Raiders becoming Super Bowl Champions under their current ownership before this happens.

  • Sarah

    I had to pay it on my last cruise (booked in early 2008 and taken in January 2009) on Carnival because that’s when all of the cruiselines had a fuel surcharge and were instituting that fee. But, because the cost dropped below 70 dollars a barrel for a long enough length of time before my trip, it was refunded back to me as onboard credit. This is an old issue and Cunard at the time was following policy. At this point in time, I don’t believe that there are any cruiselines that do have fuel surcharges. Of course, that could change if fuel skyrockets again, but I think most of them factored that cost into the cruise price after so much outrage last time.

  • frostysnowman

    Fuel charges should be factored into the cost of the cruise or plane ticket, period. If the cruise line had just added the $180 to Mr. Macbeth’s total charge, he wouldn’t have known the difference and gotten upset with being charged for fuel over and above what he paid for the cruise. That’s what these criuse lines and airlines don’t seem to get – just raise the fare $40 for the ticket and don’t charge us “extra” for checking a bag (or whatever the new fee is this week), or for the higher price of fuel that they should really be factoring into their cost of doing business.

  • Stephen Delroy

    This is just the surface of the iceberg. More and more every segment of the travel industry adds these secreted surcharges. Esp. the airlines with their desire to come out on top when searching for the cheapest fare. The gov’t should require that advertised prices be ALL INCLUSIVE, clearly stating all charges, fees and taxes so the consumer can determine the actual cost of the vacation.

  • Ames

    You hit the real point – transparency. If the cruise line had fully explained the 25 trading day window, there would not have been a question about the fee. Was it fair is still debatable, but it would have been known and the passenger could make an informed decision to go or choose another cruise line.

    I am tired of businesses transferring all the contingincies to the customer, name a price and let us take it or leave it. Stop nibbling away for a bit here and a there without presenting a full list of charges in advance of hitting the “buy” button.

  • Sarah

    For the record, on Carnival’s website, this policy was explained very clearly at the time. Since they are Cunard’s parent company, I can’t imagine that they didn’t as well. Before his cruise, Mr. McBeth could have easily checked the website and seen the policy. It was published.

  • LadySiren

    The attitude that customers are beholden to travel and leisure providers such as cruise lines and airlines is precisely why we simply won’t spend our money on either, unless absolutely unavoidable (i.e. – business travel). Ala carte pricing is confusing at best, with multiple surcharges and fees being tacked on. I’d much rather see an inclusive price up front – one that wraps every fee, incidental cost, and surcharge into a single bottom-line price.

    I’m more distressed at the lack of consideration by travel vendors. Misleading pricing and disregard for customer satisfaction seems to be ruling the day. Sorry, I won’t be giving my money to anyone, especially cruise lines and airlines, that doesn’t appreciate my business.

  • Geoff

    Fuel surcharges are a farce. The cruise lnes are dgging themselves a grave that they are nt going to crawl out of.
    1) Quit building bigger and more crowded ships. The older, affluent customer want small, great, service oriented vessels. yes it is cheaper to carry 5000 on 1 ship rather than 500 on 10 ships. The food is better, the service is better, and the atmosphere is pleasant.
    2) rebuild your current fleets instead of building new, unless you are only looking at the rich young 20-30 year old brats. They don’t dress, they do drink, and want to live on a floating city.
    3) Quit running loss leading prices in order to attract everybody. Everybody does not belong on a ship! Price the cruise, anticipate fuel increases, and stick to those prices. Who is still in business delling 5 cent pencils at 4 cents all the time?
    4) Get some cahonas! Make the dining rooms fancy to formal and let the grazers eat at the buffet.

    I have cruised 38 times and will not go on anything less than Crystal, Seabourn, Navigator, where they expect you to be part of the evening dress.

  • Abhi

    I believe it still can be argued that the average price of fuel over the period of travel was less than $70/barrel. The cruiseline is picking on the all time highpoints of the fuel cost curve. I work in oil industry and know for a fact that the deals are almost always averaged over a certain days timespan. Not at the highpoints. It is not a currency exchange or stock market transaction and wholesale buyers would wait to fill up causing overstocking and excess costs.

    I would demand to see the fuel purchase receipts from the cruiseliner to find out whether they purchased their fuel at those prices and in ideal world I would be able to see those. I believe no cruiseliner would purchase the fuel at highest per barrel cost given the duration and overall rates at that time.

  • http://cruisemates.com cruisemates

    None of the cruise lines have surcharges now, and if the cruiser had been reading cruise sites like CruiseMates he would have known the exact rule that Cunard and every other (Carnival Corp) cruise line was following. In fact we were counting down the days (25 in a row) before they came off.

    In the end, all the cruise lines ended up refunding $millions (in total) to passengers who had been charged fuel fees after they had already paid in full after class action cases mandated the refund. But the lines are ready this time, there is now a disclaimer on every cruise purchase that a retroactive fuel surcharge can be assessed at any time if the cruise lines want, even if the guest is already paid in full, once oil rises above $70bl (which it is now). The only thing stopping them is this rancid economy would make that surcharge too non-competitive.

  • Dang

    The transportation industries have the fetish to treat the FUEL SURCHARGE now as a REVENUE issue more than a COST issue. That’s why when the price of the oil barrel go down, the fuel surcharge stay. Everybody remember the Billion dollar mismanagement of the oil option purchase by the refund Northwest Airlines. The customers paid for the mismanagement of the airlines or cruise lines.

  • GreenfieldWI

    Having recently sailed on Princess, I was concerned about a fuel surcharge because price of sweet crude was >$70/barrel on date of sailing. Then my father wisely pointed out to me that the Princess web site stated:
    “…While we have now exceeded that threshold, in light of the economic crisis and resulting consumer weakness, we presently have no plans to institute a fuel supplement. We will continue to monitor the situation in the markets and review our position as the situation warrants.”

    Kudos to Princess on that one.

  • Shannah

    I like what Ames said about transparency. If a cruise line presented me with a fuel surcharge before I bought my tickets, I could decide whether or not it was worth it to me. Once I pay for the tickets, though, I don’t expect to be hit with any sort of surcharges. As Shirley mentions, I wouldn’t expect a cab driver to stop and demand more money. I also am not comfortable with how the cruise line gave a simple answer to their customer and a detailed answer to the travel writer. Does Cunard really think that their customers can’t comprehend the real reason?

  • J C

    I agree that adding fuel surcharges to fares would be easier and all fees should be all inclusive, and once you buy your ticket, tack on fees should not be allowed. But by listing the fuel surcharge as such with a defined policy as such it would allow for a refund such as Sara got as a shipboard credit.

    It’s a user fee.

    @ Frostysnowman It’s not a good idea to raise the fare of each ticket $40.00 and not charge for checking a bag. Again, it’s a user fee.
    My wife and I don’t check bags. We can travel with our 22″ carry ons.
    If you want to check bags or buy a soda on board it’s your choice. I don’t want to pay higher fares so others can check bags. Some people ( my step kids ) only check bags so they can walk on board unincomberd. Their choice.
    User fees are fairer than higher fares or taxes

    Lets face it . The good old days are gone. Fee based trips are here to stay. You can choose where you want to go and how you want to get there and what fees you wish to pay.

    If you don’t like what a particular airline or cruise line is doing, Go somewhere else. It’s the only thing that will have an effect on them.

  • frostysnowman

    @JC – my point about the bag check fee is that if the airlines had just raised fares slightly (and I don’t think $30 or $40 extra is a lot to pay) in the first place instead of instituting these extra fees, no one would have been the wiser. Then no one feels unfairly treated. Same goes for any fuel surcharges.

  • Roberto

    There is absolutely no reason for cruise lines to have fuel surcharges. If cruise lines are concerned about fuel prices rising, they can hedge their risk exposure via the futures market like the rest of the known universe.

    Thank you for reminding me why I don’t cruise.

  • Troy Gorda

    Travel is the only industry I can think of that constantly gimick’s their customers. You need an education just to deal with all the possible ins and outs of travel. Well how much is it? Its this much. Great I’ll buy it, well now that you’ve bought it, you owe this much more. Why? Because we don’t like our expenses! Fuel costs money! The travel industry is also the only industry I know of that expresses the problems in their business to the customer as a reason for mistreating their customers. Can you imagine going into Sears and having them whine to you about the unfair tarriffs they have to pay, how much more labor costs them, their insurance rates are through the roof and the government keeps taxing them? Of course not, its ridiculous and your response would be, if its that bad, get out of the business. Since its travel we put up with this non-sense. Travel companies, from air, to car, to hotel, to cruising, to the automobile industry, teach their customers to lie or “play the game”. How much is the car, its this much…well how about I give you this much, well I can’t do it for that but if you buy today I’ll throw in free fuel for a year (not to exceed this amount in fine print) and oil changes for life (not to exceed this amount, see small print). The airlines have more rules than even they know or understand and they wrote them but we’re suppossed to bound by them and if they screw up, they don’t have to say a thing unless you write the letter, contact the web site, or make a fuss. Hotels do the same thing by overselling the property, but always having one room, cancelation policies, that train you to just change your hotel dates of stay and then cancel later, to car rental companies that tell you the one way rental isn’t available so that you lie and get the car and turn it in where you need to go. These companies all try deceptive practices to increase their bottom line. That bottled water in room? No it wasn’t a welcome gift, it’s a $7.50 add on charge when the made cleans your room and doesn’t find it there, that rental car you were supposed to return at noon that you returned at 5? An extra $10.00 adjustment charge, and thats on top of the extra day charge you got hit with, the luggage fee they added to your flight, well their not responsible for the luggage and it may not arrive at your destination anyway. Finally the cloak everything in their loyalty programs, were you get “free” upgrades that we are all paying for. The next time you get walked at a hotel, you can thank their loyalty program for kicking you out of your room so that the elite member gets his guaranteed stay. The next time you can’t get an assigned seat because “seating is being held till gate check in” you can thank the frequent flyer programs that causes them to hold a large number of seats to give special priority to someone. I don’t have an easy solution but if there are any CEO’s out there reading, get rid of the garbled mess of rules, regulartions, add on charges, and gimicks, and concentrate on providing your product to the masses in the simplest customer friendly way and you’ll find customers flocking to you in droves, Southwest did.

  • Noah

    As long as they tell you the rules beforehand, I see no justification to complain about this. If you don’t like it, don’t buy a ticket.

  • Lawerence

    Bit of a moot point? Cost of oil has been well above $70 for the last 4 weeks and no fuel surcharges. Seems like everyone’s complaining about ancient history. Don’t you have something more timely to complain about?

  • Anna

    I recently booked airline tickets from A to B in Europe. I always use a search engine (similar to Expedia) to get an overview of prices, timetables, options etc. This is the simplest way to get the no-nonsense-completely-final-full-everything-included price.

    When I find something I like I book it directly with the airline. There you get the specification; the fare, the fuel surcharge, tax A, tax B, tax C, the unusual number of right turns on this route surcharge, tax D, holiday fee, checked baggage fee… whatever.

    I this particular case, two airlines had nearly identical offers for my A-to-B trip. The fun thing was, when I took a closer look the specifications were something like this:
    Airline A: Fare 20 Euros, fuel surcharge 30 Euros
    Airline B: Fare 30 Euros, fuel surcharge 20 Euros
    What’s the difference!? Personally, I don’t really call care what they call it, if it’s a fare or a fee or a surcharge or a super-special-for-you-my-friend-only discount, just give me the total.

  • Doug

    Entirely justified from a hard-nosed business standpoint – but obnoxious enough to prevent me from EVER considering one of their cruises.

  • Mike

    I’m sorry, but fine print or not, by now fuel prices should be built into the price of the cruise or airfare that you are buying. We aren’t talking about a customer beinging 20 bags aboard either, we are talking about a standard charge that tehc ruise line will shell out no matter who their customers are. Sailing a ship costs money and they all know how much it will cost them.

    It is also sad that just to take a flight or go on a cruise I need to read through more fine print than I did when I bought my first house. There is no excuse for that.

  • Joe Farrell

    I have not set foot on a cruise ship since 2005. It was my third time. First time was for a solar eclipse specialty cruise – so I had no frame of reference. 2nd time was a Disney 4 night with a special needs child – third time was in 2005 on RCCL. The RCCL was in a suite- and boy was I disappointed – no special amenities, no special boarding, no special access to perferred times for anything – no special tender access. Not even a departure bottle of champagne, well – there was a warm bottle of champagne in a buck without ice – $45 plus tip if we opened it. So, yeah, I understand the nickel and diming.

    Never again. Never will I set foot on a cruise boat again. I took hot tea, grabbed glass, put ice in it – and they then wanted to charge me for iced tea. Thats it – I”m done. Your annoying practice of charging me for everything except the crappy food you serve in the buffets or at the BBQ’s turned me off for good.

    The constant drop in the service and amenities provided, coupled with the constant hand out for a tip to simply do your job – thats it. Done. And there are more and more people who object to the business practices . . .

  • http://cars.about.com Aaron Gold

    Fuel charges are stupid. Imagine if you went to Target, bought and paid for a toaster for $22, and then was stopped in the parking lot and told there was a $2 fuel surcharge because of the cost of diesel fuel to chip it to the store. Any other business takes its operating expenses into account and adjusts prices accordingly. Why can’t cruise lines and airlines do the same? I am yet another person who travels a lot but does not consider cruising as a vacation, and it’s because of shenanigans like this. Thousands of dollars spent elsewhere. Are you listening, Cunard? Nah, probably not.

  • http://aol barbie45

    I just wish the cruise lines would advertise one thing – the final cost. Queen Mary is a luxury cruise not a cheap Carnival special . If you are unhappy with 180.00 -simple do not go.

  • Carver Farrow

    @barbie45

    I think that misses the point. The OP isn’t unhappy with the $180;. Its the way it was done. Transparency and finality are two values in consumer transactions, both of which are missing in this situation.

  • Merlin

    Carver, don’t bother trying to find the logic in barbie45′s comments. There is none to be found. Replying to her only encourages her to keep commenting. Many of Chris’s fans are hoping that she’ll go away and take her nonsensical ramblings somewhere else, allowing this web site to return to its former, readable state.

  • AL

    I wonder how long the cruise line staff would support the unwanted and unneeded fare hike, if passengers used the monies allocated for “Tips”, to pay the extra fees.

  • LeeAnne

    @AL – I strongly disagree with you on that suggestion. The crew on cruise ships work very hard to make sure passengers have a memorable vacation. Their pay is based on an assumption that they will receive the tips that are recommended by the cruise line. It would be terribly unfair to them to penalize them financially for the cruise line’s unfair billing practices. It’s certainly not the crew’s fault! They are hardworking people who often leave their families for months at a time to be able to earn a decent living and give their families a better life. I hope you can see how wrong it would be to make THEM pay for the corporation’s unfair practices.

  • Sarah

    I completely agree LeeAnne. Tips should not be removed unless directly related to the crew’s performance. If you go on a cruise, budget for at least the recomended tips. They are well published in advance and should not be a surprise.

  • Michelle

    I agree with Chris. Short of some unexpected, worldwide crisis, if you are incapable of making a viable financial plan that will include fuel costs in the price of a cruise, you either need to hire better people or get out of the cruise business. Same goes for airlines, bus companies, etc.

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  • http://aol barbie45

    Al, I do not think your idea would be very practical or popular. we might have a mutiny on board. On several cruises I have been on the service has been horrible; On others very good. Maybe we just use those tips for the real horrible staff for your proposal. just kidding,

  • Shari

    My husband has been talking about wanting to take a cruise. Everything I read on this site tells me that I shouldn’t. So glad to hear about all of this before I go and make the mistake of booking a cruise, because I know that the deplorable business practices I read about here would have my blood boiling by the end of the cruise.

  • Sarah

    Shari,

    Please keep in mind that you aren’t getting the good cruise stories on this site. Millions of people go on cruises every year without a problem of any kind. The fuel fee is an old issue and the fees were well publisized at the time they were being charged. They were by no means hidden fees like this article suggests. Now is a great time to book a cruise because fares are low.

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