Fri, Feb 04, 2011 - Page 6 News List

Qantas increases fuel surcharge

FIRST SINCE 2008:The Australian airline said the new surcharges would not fully cover the additional cost of rising oil prices, and did not rule out further increases

Bloomberg

Qantas Airways Ltd, Australia’s biggest carrier, increased the fuel surcharge for international flights for the first time in more than three years amid a 33 percent rise in energy costs since September.

Tickets issued from Feb. 19 on European routes will attract a surcharge of A$145 (US$147) one way, up from A$95, Sydney-based Qantas said in a stock exchange filing yesterday. Fares to North America will incur a fee of A$115, compared with A$85 previously.

Qantas joins competitors British Airways PLC and Singapore Airlines Ltd in raising fuel fees in the past two months after the cost of jet fuel rose to US$117 a barrel from US$88 a barrel in September.

Oil prices yesterday rose above US$91 a barrel in Asia amid mixed US crude and gasoline supply figures and violent street clashes in Egypt.

Benchmark crude for March delivery was up US$0.48 at US$91.34 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract settled US$0.09 higher at US$90.86 on Wednesday.

In London, Brent crude gained US$0.88 to US$103.22 a barrel on the ICE Futures exchange.

Oil prices at current levels will increase airline costs by more than this year’s projected earnings, threatening the industry’s return to profitability, the International Air Transport Association (IATA) said.

“Qantas surcharges will not fully recover this additional cost, and we cannot rule out further changes in the future,” Qantas chief executive officer Alan Joyce said in the statement.

The fuel surcharge increase is the Australian carrier’s first since January 2008 and follows four cuts to international fees and the scrapping of domestic charges during that period.

IATA on Dec. 14 forecast carriers would log net income of US$9.1 billion this year based on oil at US$84 a barrel. With crude trading US$7 higher than that and every US$1 increase boosting the fuel bill by US$1.6 billion, costs at airlines could increase by US$11 billion.

Ticket prices on domestic flights and those between Australia and New Zealand are under review given the increased costs, Qantas’s Joyce said yesterday.

Jetstar, the airline’s budget carrier, won’t bring back fuel surcharges, and will instead offset higher costs by raising ticket prices on some routes and increasing baggage charges, according to the statement.

Qantas said it has hedged 66 percent of its expected fuel needs until the end of June at a “worst-case” crude oil price of US$93.06 per barrel.

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