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Fears of New Airline Surcharges As Fuel Costs Soar

Posted on: Wednesday, 10 August 2005, 18:00 CDT

ANOTHER round of airline fuel surcharges is looming with several global carriers weighing up further increases to tickets prices to claw back the costs of soaring fuel bills, writes Jake Lloyd-Smith.

Australia's Qantas Airways, its low-cost affiliate Jetstar and local rival Virgin Blue all indicated that further fare reviews were on the cards.

"We still face A$600 million (Pounds 256 million) shortfall [for fuel] compared with last year.

We are cautiously considering a fifth surcharge to recover some of this," Qantas finance officer Peter Gregg said today.

BA has already unveiled two fuel-related surcharges, the last in June, to help mitigate soaring fuel costs. Its surcharge on long- haul flights is now Pounds 24 a person and Pounds 8 on short-haul.

Hong Kong-based Cathay Pacific Airways today said rising fuel bills had hit its firsthalf profits, which slipped 5.7% to HK$1.67 billion (Pounds 120 million).

Crude futures this week topped $64a-barrel for the first time amid booming global demand, tight supply and fears of terror attacks in key producing countries.

The September contract today traded at 13 cents up from yesterday's New York close at $63.20 a barrel and traders say that they expect it to move further into uncharted territory before the end of the month.

Jet fuel typically accounts for about 20% of a full-service carrier's cost base, behind wage costs. As prices have climbed, some airlines have been spending more money on fuel than anything else.

Source: Evening Standard; London (UK)

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