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BA Ups Fuel Surcharge on Long-Haul Flights

Posted on: Friday, 9 September 2005, 06:00 CDT

British Airways is raising its fuel surcharge on long-haul tickets for the fifth time in a year following a surge in oil prices to record highs.

The UK's flagship airline yesterday said the levy on long-haul tickets sold in Britain would rise to pounds 30 per flight on Monday, up from pounds 24 previously.

However, the pounds 8 surcharge on short-haul flights - where BA faces stiff competition from low-cost airlines Ryanair and EasyJet - has not been changed.

BA introduced a pounds 2.50 fuel levy in May 2004 and first raised it last August to help offset surging oil prices. Other major European airlines are also reviewing their fuel surcharges.

"Our fuel costs remain a real burden. The price of oil hit a record high of just over $70 a barrel in the aftermath of Hurricane Katrina," said BA's commercial director, Martin George.

"We believe that it is better to be transparent with our customers about the price of fuel by showing the level of fuel surcharge they are paying rather than hide the costs by raising fares behind the scenes like some other airlines choose to."

Fuel is the airline's second-biggest cost after labour. BA said it now costs almost 400 per cent more than it did in December 2001 to fill up a plane with fuel.

Analysts supported the long-haul increase, saying a further such rise was unlikely to deter passengers, with demand still strong for North American and Asian services.

"They've clearly reached the limit on yield management on where they can go on short-haul and anticipating a weaker winter period. It is pretty clear they think there is more to go on long-haul," said BNP Paribas analyst Nick van den Brul.

The move follows a decision by Sir Richard Branson's Virgin Atlantic Airways on Tuesday to raise its fuel surcharges on tickets sold in Britain to pounds 30 per flight.

BA said it was nevertheless maintaining earlier guidance for annual revenues to come in 5.5 to 6.5 per cent higher this year. The carrier says current oil prices are too volatile to make predictions about its fuel bill for the year.

Meanwhile, oil prices moved higher yesterday, recovering some of the week's sharp losses.

US light crude rose 57 cents to $64.94 a barrel, after plunging $1.59 on Wednesday. London Brent crude rose 65 cents to $63.54 a barrel. Shares closed down 1 3 /4p at 288p

Source: Birmingham Post; Birmingham (UK)

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