MORE FUEL SURCHARGES

I have just found out that there is one boat in Indonesia that is now adding yet more extra chargers to their clients, and get this - even after they have paid in pull...

First of all, can they do this legally?

And...

Has anyone heard anything about other boats world wide doing this?

The Fling and the Spree (www.gulf-diving.com) added fuel surcharges to their rates to the Flower Gardens and Dry Tortugas just a month or so ago. They made the announcement and did add the charge to trips paid in full but not yet left, effective like a week after the announcement or so. We got the call that our paid reservation required a tacked on charge, and paid willingly.

I don't know about "legality". But in my case since the FG trip is "local" the surcharge is in lieu of having a paid airline ticket get 'cancelled' (which is happening all over as the carriers trim future schedules, note the Bonaire threads earlier this year), so I don't see how it's any worse than that. At least i got the option to pay the surcharge or cancel my own reservation for a refund, instead of having it just evaporate. No, I still don't like it, but if the charters don't make money, they go under and I don't get to dive there anymore anyway.

Well Graham, with boats having to lay out schedules 2 years in advance and the highly volatile nature of fuel prices right now, it's not unexpected. It's either that or the company cancels an unprofitable trip. An honorable company can charge fuel surcharges but they should also pass it back to the customer should fuel prices fall.

In the case of Indonesia, where fuel prices are controlled (and subsidized) by the state, I don't see how the Indonesian government can possibly keep subsidizing fuel to support its people. Can you imagine if the price of fuel reflected the market rate? The bemos would stop running (which is a good thing really) and boat costs would certainly go up a lot.

It's the nature of the beast. We want our cake and eat it too and nowadays it's not going to happen. Even the cheapest places to dive has increased prices. The price of a commodity will dictate demand and supply.

Commercial fuel in Indonesia is a hell of a lot more than the rate you pay at the pump, but some of the fuel surcharges are ridiculous on liveaboards. Work out how much a full boat of surcharges makes and the mind boggles - how much is the surcharge you're talking about and what is the itinerary?

Drew - Only certain fishing boats and cargo vessels get subsidized fuel out here, and the government has so little cash that Bali is almost always out of it's maritime subsidized fuel ration - things aren't looking good.

I think all boats do fuel surcharges though - and have done for the last 2 years or so, but i'm sure they are here to stay regardless of fuel prices dropping (unlikely). As Drew said, it's not fair if someone books a trip for this year back in 2006 and only pays $3500, but i book it this week and pay $4000 due to increased fuel prices. The only fair way to do it is onboard the vessel then everyone pays the same.

Well Simon I'm not going to say anything except look at when the surcharges started... right after Jakarta rised the prices.

Well then don't say anything! I am merely adding to your info not disagreeing with you.

Liveaboards have not, to my knowledge, ever had any direct subsidy from the government out here - especially as it related to the GT of the boat and smaller boats get bigger subsidy hence a 60 ton fishing boat is registered as half that! Sneaky buggers. a 200 ton boat wouldn't get much subsidy anyway.

Yes prices have increased but i remember in xxxxxx when i first started billing surcharges several years ago... the fuel price there hadn't changed and didnt change for some time! Hence as a paying guest i don't appreciate paying them even if they are now a required part of running the business.

Thanks for the responses! I simply wanted to know what others thought about this.

Drew, sadly we know that fuel prises will not go down, if only hey!!!

Simon,

I don't think anyone is suggesting that liveaboard operators ever enjoyed direct government fuel subsidies. Rather, everyone buying fuel (including you and me for our autos or motorbikes) have indeed been the beneficiaries of the Indonesian fuel subsidies, which have applied to all automotive petrol/gasoline, diesel, as well as "elpiji" (LPG gas) and kerosene used for cooking sold in the country). The list of beneficiaries has included liveaboard operators (and passengers) as well.

The 30% across-the-board increase in retail fuel prices in May, the first since the last big jump in 2005, was actually just a cut in the level of subsidy from completely unsustainable levels to the merely insane. Indonesia will still spend somewhere between US$20-30 billion on fuel subsidies this year, almost a third of the national budget, more than any other country in the world except China. However, fuel is still subsidised. The new official price for diesel, Rp 5,500 / liter (about US$0.60) is still well below world market prices. How much Jakarta's fuel final total fuel subsidy bill will finally end up at depends on where the price of crude goes over the next five months - the price was around US$117 a barrel when Jakarta cut the fuel subsidy in May.

Boats bunkering (taking on fuel) in the outlying islands have often had to pay higher prices than the official numbers. Distribution and sale of fuels down to the depot level is controlled by the state-owned monopoly corporation Pertamina, but the Pertamina system of distribution throughout the archipelago is "a failure", as an article in today's Jakarta Post put it. Local distributors in outlying places like Sorong are allowed to add on their own surcharges on top of the Pertamina base price ostensibly to cover the costs of transporting fuel from Pertamina's central depots. People have been complaining about this for years, but it hardly matters. In the worst case, the price of diesel and kerosene sold on the farthest outlying islands can be double the price in Java or here on Bali.

In reality, moreover, what seems to be happening now is that fuel distributors are simply holding fuel off the market or imposing much bigger "local surcharges" because almost everyone believes that the government will be forced to reduce subsidies by raising fuel prices again, possibly soon. This practice is prevalent in the outlying parts of the archipelago, but it isn't unknown even here in Bali. You may have noticed, Simon, as did I and many other drivers, that many Pertamina petrol stations suddenly and mysteriously "closed" or "ran out of fuel" the week before the subsidy cut and price hike last May.

This seems to be happening again. When I was in Komodo in July, two liveaboards (no names!) were about to be forced to shut down operations and shift their guests (who had already arrived in Bali or Labuanbajo) to other operators because they were unable to purchase fuel in Flores at any price. Other boats with better connections to dealers were getting fuel, but my understanding was that everyone who did get fuel was being forced to pay a hefty surcharge on top of the new prices.

Nothing I've written her should imply that tolerance of operators who use rumors of fuel price increases as a pretext to impose an unnecessary surcharge on guests. I also agree with Simon (and Drew) that costs need to be shared fairly among the all the guests, including those who booked early and late. Personally, however, I also believe people who booked and paid for their trips in advance with the understanding that they had paid in full should be given the choice of paying the surcharge or else backing out, with a full refund of all monies paid. I can also see that this may not always be possible. This is a difficult situation, things probably need to be approached case-by-case. It's very important to be dealing with people you trust.

Robert Delfs

I just came back last week from 3 weeks of diving in Bali, Mermaid had a fuel surcharge of 140 Euros

I have been quoted USD150 for 10 days on the Ondina in Raja Ampat in April, "to be paid in cash, on the boat." I suspect its for a fund to 'facilitate' locally required permits and other expenses.

I would be interested if diving companies are still charging surcharges over the coming months as the price of oil has come down so much.

If you get charged please post to let us know.

Alex

I would be interested if diving companies are still charging surcharges over the coming months as the price of oil has come down so much.

 

If you get charged please post to let us know.

 

Alex

interestong article in thw Wall Street Journal on Fuel Surcharges and the airlines...

http://blogs.wsj.com/middleseat/2008/09/04...charges-follow/

I go live-aboard diving in Indonesia about once a year on group trips. The first time the government reduced the subsidy, we showed up on the boat and were informed that there would be a fuel surcharge. Our trip organizer told them they were mistaken. She reasoned that they had known for some time that the price of fuel was going up and that they had had plenty of time to warn us in advance. None of us had figured the surcharge into our cash budgets so we didn't pay. The next year, the boat let her know ahead of time and we were able to just pay it in advance with the price of the trip. Given that surcharges are now standard practice, there should be no surprises. If the boat wants cash at the time of the trip, so be it (for whatever reason -- probably best not to ask), but they owe it to guests to inform them as far in advance as possible.

Oh, and despite the fact that the price of oil has gone down, that doesn't mean the price of fuel will go down in places where the government was heavily subsidizing it to begin with and reduced the subsidy . . .

Mike

Pertamina prices of Marine Diesel Fuel have fallen from mid-June 2008 to now considerably, if I am not mistaken, by almost 27%.

The following figures are the official prices (from Pertamina itself) in Indonesian Rupia/Kilo Litre for non-subsidised marine fuel excluding tax for distribution in regions 3 and 4 [where roughly, at least some of the boats out there will probably re-fuel, although the prices across distribution regions follow each other].

Date Region 3 Region 4

15/Jun/08 11118857 10665571

1/Jul/08 11462000 10984000

1/Aug/08 11228500 10761000

1/Sep/08 8823600 8421000

1/Oct/08 8125600 7736400

TO THE PEOPLE IN THE LIVEABORAD INDUSTRY OVER THERE: One must stick to the conditions in the contract one signed, if the price of fuel goes up you absorb the cost if it goes down you pocket the difference and this how it should be and it is how it is when one deals with real business men! The way it is now is: if the price of fuel goes up [or the subsidy goes down or whatever], the customer (who already incurred in considerable expense booking flights, paying the deposit for the trip) has to cover the cost from his/hers own pocket and is for all practical purposes held hostage either by the organiser (who might just be in the same position as his customers) or by the liveaboard company or both. But if the price of fuel goes down you pocket the difference!

Such behaviour is UNACCEPTABLE and it reflects the complete lack of business ethics over there. YOU STICK TO THE PRICE THAT YOU NEGOTIATED AND AGREED UPON!!

I made a note of this fuel surcharge rip-off mambo-jambo (since I am also a victim) and will restrict considerably my future travel plans to Indonesia until these companies start behaving in a professional, business like manner.

Jorge,

The issue isn't as simple as you make it out to be. The point is that often the boats have to pay more for fuel in the outer islands. The domestic fuel situation is very complicated. Basically the prices you and I see are not the prices they pay. As Frogfish (Robert) noted before, fuel supply is used to extort the liveaboards. Fuel cost projection is not a science but a dark art or like pin the tail. Nobody expected oil to rise to meteoric levels in 2 years and surely nobody expected it to drop $30 in 5 mths either. If anyone can cost fuel (in a subsidized environment and also in the actual arena where the fuel can cost a lot more 'just cos they can charge it' in the outer islands, plus prices held pretty well over the last few years while fuel prices sky rocketed.

It's highly unrealistic to expect a company to hold the prices over 2 years when one of the major costs is so variable (actually only going up!). Any business which operates like what you want them to, to run whether they make money or not, will just go under very quickly and then you'll be out of your deposit. I'm sure that will make you even angrier than the fuel situation.

So while you can of course boycott the Indonesian dive industry for not knowing how to price beyond 6 mths. You'd also have to boycott the airlines, who will never give you back the fuel surcharges. I'm sure the indo dive industry will be having a big shakedown with the impending downturn. Then the supply of seats will dwindle and you'll end up paying more for each berth anyways.

Btw,

I just came back from a remote area where I was charged about 2.5 times the national average for diesel because they have their own surcharge. It seems the suppliers add their own surcharge to fuel bought at the national prices because they can.

Speaking with the fishing boats, it seems even the Korean and Taiwanese fishing boats choose ports where fuel is cheaper than other high use ports, with price variations that are over 300% more than the established national price.

Liveaboards are also victims to this sort of price gouging. So paying a fuel surcharge for the trip is something no one likes but it's a necessity for the liveaboard to stay afloat.

I have been quoted USD150 for 10 days on the Ondina in Raja Ampat in April, "to be paid in cash, on the boat." I suspect its for a fund to 'facilitate' locally required permits and other expenses.

SMY Ondina charges a $150 fee on their Raja Ampat trips (charters are different.. and depend on the specific agreement between ship and charterer).

For non-charter trips the fee is given in their price lists and web pages:

"Due to logistic difficulties and higher costs in the area, the Sorong Routes are slightly higher price than the rest. All passengers on 2008 cruises must account for an additional fee for police permits and tourist fee and fuel surcharge of 150usd/pax. S.M.Y. ONDINA could be forced to increase the published cruise price due to the following reasons: A strong currency fluctuation (Euro, Dollar or Rupiah), an unexpected raise on existing taxes, new taxes imposed, a sudden increase in Fuel" quoting http://www.cityseahorse.com/indonesia-liveaboard-schedule.php

The fuel surcharge (part of the fee) was added in Oct 2005 and has not increased since, even though fuel costs did increase... I can't believe they left the fee the same!

The fees a ship pays vary according to the agent a ship uses to handle the processing. The sort of "facilitation" necessary is in Ondina's case a legitimate fee paid to an agent to process all the paperwork for the tourist divers plus the actual permit fees paid to the government(s). Papua/Irian Jaya has required a permit for tourists for ages (I first paid in 1990) and now there is also a diver tag required for Raja Ampat. Plus a portion to cover increased fuel costs.

Mike 0. mentioned my group once being surprised by a fee on a trip. That was a misunderstanding between the ship owners in Spain & the cruise director. Fees were addressed in our written agreement, so I only had to point this out and no problem. Since then my contract has been revised. Prices, fees and a few other special items I require for my charters are spelled out clearly.

I include the extra fees in the initial invoice so that our guests are not required to bring cash with them. However on the non-charter Ondina trips, the diver can choose to pay on the ship or to send the money with their trip payment. Since some people forget about the fee, I've encouraged the ship owners to collect it with the final trip payment. When I take a booking for Ondina on a non-charter trip, I include the fee on the initial invoice so there is no confusion. The exception is when I arrange a charter for a group, I leave it to the group leader to decide to pay the fee in advance or let each diver pay on the ship (in that case I'm not invoicing individuals).

We ended a trip in Lembeh last May and saw Pindito sitting in Bitung. It is my understanding from our Indonesian crew, that Pindito's crew got caught up trying to buy subsidized fuel when the delivery truck caught fire. The fire brought a lot of attention to their delivery. The captain, first mate (and some other crew.. I forget) were arrested and jailed. I guess the ship was lucky not to be held up too long.. I was told they sailed without the first mate. So no point in liveaboards trying to save on fuel that way.. very dangerous!! Bad for the ship and any divers booked on next trips whose might not go out because the crew is in the slammer!!

DebF

I made a note of this fuel surcharge rip-off mambo-jambo (since I am also a victim) and will restrict considerably my future travel plans to Indonesia until these companies start behaving in a professional, business like manner.

That's too bad.. Indonesia is great diving and its a bargain given the quality of diving there even if we do sometimes have to pony up another 3 or 4 % of the liveaboard price for a fuel surcharge or increased permit fees or taxes.

The alternative, to guarantee a fixed price, would mean I would need to estimate the maximum amount that I could possibly have to pay (1-2 years in advance) and sell trips at that price, rather than trying to keep the price low and just add on small charges as necessary. If I did that, and prices went up so much that I'd lose money, I would have to cancel the trip. And that would possibley leave divers holding non-refundable International air tickets and other activities planned around their liveaboard trip.

This year I booked air tickets and a hotel in Sorong (with meals) for my Raja Ampat groups and as alway, didn't add anything to the cost (I just do it as a courtesy.. includes porters, transfers, a fee to my helpers in Sorong). Even though we purchased the air tickets at the stated price, a change in schedule caused us to have to switch airlines at an increased cost. AND although we have a contract the hotel also increased their price.. on the room and on food. I had not warned my groups about this (didn't expect it).. so I ate the increased cost.. which wasn't very funny for 24 people when I had not added any commission to begin with!!

Can you imagine a liveaboard doing the same for every trip they run? It would put them out of business.

I'm for keeping the base prices low and adding on surcharges as required.. but divers should understand this when they book a trip... and should be told of any increase as soon as the dive op knows about it.

DebF

I always pay a surcharge in PNG, too.