July 20, 2009

Airlines raise domestic fuel surcharges

Lufthansa and other non-U.S. airlines have increased fuel surcharges for passengers, raising the prospect U.S. carriers will follow suit, analysts say.

No. 5 airline Lufthansa cited higher costs and lackluster revenue due to low air-travel demand as a reason for the increased surcharges on domestic and international routes, USA Today reported.

Other airlines also raising domestic and international surcharges include Thai Airways, India's Jet Airways and Kingfisher Airlines and several Taiwanese airlines, the newspaper said.

Lufthansa raised its charge on German and European flights by $4 to $34 a flight leg, but left the charge at $116 for trips to the United States.

Carriers are still looking for revenue (to make up) for the revenue shortfall due to the weak economy and fewer travelers, David Castelveter, spokesman for the U.S. airline trade group Air Transport Association, told USA Today.

He said fuel costs account for 21 percent of U.S. carriers' operating expenses.

U.S. airlines already have increased surcharges on most international routes, but have so far not followed their international competitors in raising surcharges on domestic routes, the newspaper said.

U.S. carriers eliminated or significantly reduced fuel surcharges for thousands of domestic fares and folded the smaller surcharge amount into the airfare in November.

But fuel prices began inching up this spring, U.S. Transportation Department figures indicate.

Fuel surcharges can add $100 to $250 to a round trip, airfare Web site FareCompare.com Chief Executive Officer Rick Seaney told USA Today.