New Fuel Surcharges for Long Haul Flights

MALAYSIAN Airline System Bhd (MAS), the country’s sole national carrier,

plans to impose a new set of fuel surcharges this month for its long haul

passenger services, people familiar with the plan said yesterday.

The airline, which reported a loss of RM280.7 million in the three

months ended June 30, may increase the surcharge by as much as RM56.57,

while flights to Singapore from Penang might cost RM26.40 more.

MAS current surcharge of RM105.58 is one of the lowest for an airline

of its class. Rivals such as Qantas Airways Ltd, Australia’s biggest

airline, and Cathay Pacific impose fuel surcharge in the region of

between RM158.38 and RM173.45.

“We are monitoring the situation closely. We will make the necessary

announcements if we were to increase the surcharge,” a MAS official told

Mail Money.

The surcharge is imposed because of the spiralling jet fuel prices,

which breached the US$80 (RM301.76) a barrel mark for the first time in

history.

At the benchmark, Singapore Jet Kerosene Fob Spot Cargo Price Index,

the commodity was trading at US$83.75 a barrel on Aug 31 as opposed to

US$47.95 a barrel on Jan 3.

MAS which employes 20,789 people is also under pressure to keep in

check its staff cost. The carrier employs 207 people to operate one

aircraft while Qantas does the same with 196 staff. Singapore Airlines,

Asia’s most profitable carrier, employs 144 people to operate an aircraft.

Analysts who cover MAS expect the carrier to increase its fuel

surcharge due to two reasons, namely higher fuel costs and to bring its

surcharge in line with rival airlines.

MAS fuel cost jumped to 58 per cent in the first three months ended

June from 34 per cent for the 12 months of 2004, making fuel, the most

important operational cost for the loss making carrier.