Allegiant Air may peg ticket price to jet fuel cost
If Allegiant Air gets its way, you might be able to purchase a ticket where the final cost would rise and fall with the price of jet fuel.
For the Las Vegas airline, it's another way, besides higher fares and fees, to guard against rising fuel costs. For travelers, it's a chance to gamble on a cheaper fare.
When booking a flight, passengers could choose between a traditional fixed-price ticket and a discounted, variable-price one. If the price of jet fuel falls by the departure date, customers with a variable ticket would get some cash back. If the price climbs, they would pay more, up to a pre-disclosed cap.
Most airlines already use financial contracts to lock in part of their future fuel costs to protect against wild oil price spikes. Otherwise, they pay the going rate at the pump and hope it's not too exorbitant. The airlines gamble on finding the right balance. If they lock in too much fuel and prices fall, they lose.
Allegiant's plan, in a way, passes that decision -- and risk -- on to customers.
The Department of Transportation has proposed a new consumer protection rule preventing airlines from increasing prices after purchases are made. Allegiant recently disclosed the new pricing option in a letter to the government opposing the rule and suggesting this program as an alternative.
Allegiant posted a double-digit passenger increase at McCarran International Airport in January.
The airline doesn't have any immediate plans for the new pricing option but wants the flexibility to offer it in the future, says Allegiant spokeswoman Jordan McGee.
