Surcharges to increase on British Airways flights

OIL PRICES: The company turned in good earnings last quarter. But higher fuel costs will be passed on to customers, even as a rival promises to hold the line

AFP AND DPA , London

Tue, Aug 10, 2004 - Page 12

British Airways is to pass on some of the burden of recent record oil prices to its passengers by more than doubling a fuel levy paid on long-haul routes, the company said yesterday.

The airline, which also unveiled quarterly profits near the upper end of analysts' expectations, will increase a fuel surcharge on long-haul single tickets from ?2.50 (US$4.60 dollars) to ?6.

On return flights, the charge will go up from ?5 to ?12, the airline said in a statement.

The increase takes effect from Aug. 11, with a short-haul surcharge of ?2.50 remaining unchanged.

Fuel prices are proving an increasing headache for airlines worldwide, with oil hitting fresh record highs late last week. Brent North Sea crude soared to US$41.50 dollars per barrel on Friday.

British Airways has warned that its fuel bill for the financial year to the end of March next year is likely to rise by around ?225 million, of which the increased surcharge will recoup only about ?70 million.

Nonetheless, the carrier saw operating profits for the three months to the end of June reach ?150 million, near the upper end of analysts' expectations of 95 million to 160 million.

The figure was also significantly higher than the ?40 million operating profit seen in the same period last year, when the world aviation industry was rocked by both the Iraq war and the SARS virus in Asia.

"These are reasonable results but currently fuel and employee costs remain our biggest challenges," chief executive Rod Eddington said.

Martin Broughton, the airline's new chairman, noted that market conditions remained difficult.

"Long-haul premium volumes are recovering steadily, while short-haul premium travel remains at lower levels. The non-premium markets are very price-sensitive," he said.

Ryanair, a major rival to British Airways on short-haul flights within Europe, said it had no plans to introduce fuel surcharges.

Communications head Paul Fitzsimmons said: "Every Ryanair passenger can rest assured that Ryanair guarantees no fuel surcharges -- not today, not tomorrow, not ever."

Virgin Atlantic Airways, which introduced ?2.50 surcharges earlier this year, said it was keeping the issue of further possible charges "under review."