Knowing that fares are likely to continue going up as fuel prices rise, some travelers are booking air travel well in advance to lock in an affordable fare that won’t change in the coming months. However, Allegiant Air wants to offer travelers the option of buying a ticket that, even after purchase, could go up or down in price depending on the cost of fuel.
In a letter to Dept. of Transportation Secretary Ray LaHood, Allegiant’s CEO writes about the new pricing option under consideration:
When making a purchase, consumer would be able to choose between a traditional “locked in” fare that would not fluctuate, and a lower fare that could change before the date of travel. That lower fare could be reduced further or could increase (up to a set maximum that would be clearly disclosed) depending on changes in fuel price between the booking and travel dates.
So you could end up with a less-expensive ticket than you’d originally purchased, but you’re taking the big risk that the fare will increase.
Charter carriers have been working under a similar model for years, but this would be a first for a U.S.-based commercial airline.
“Allegiant is basically trying to put their fuel hedging strategy on the backs of its passengers,” Michael Miller, a VP at the American Aviation Institute, tells Elliott.org. “Pay more now, or pay more later based on a very complex oil market… airfares are complicated enough as it is.”
Asks one Allegiant passenger, “How likely is it that the price of fuel is going to go down?… I would also question how the consumer would truly know whether any fuel increases that Allegiant claims are accurate?”