Concern is growing, that airlines may soon be forced to start imposing a fuel surcharge on ticket prices, to offset the damage being done by soaring world oil prices.
Over the past few months, crude oil prices have been running at their highest levels since the Gulf crisis five years ago, and jet-fuel prices are estimated to be up by around 12-13%, from an average ó65 to ó74/US gallon (ó19.5/l). Many of the World's airlines are now talking seriously about the possibility of passing the rise on to customers.
The issue is due to be raised at an International Air Transport Association (IATA) conference on tarrifs in mid-November. Some airlines have already moved to levy a fuel surcharge. KLM has been among the first to add a charge to passenger fares, and that is now joined by a levy of around ó11/kg on freight by KLM Cargo from the start of November. Swissair Cargo says that its cargo rates will rise by ó10/kg.
Other airlines could follow as fuel costs begin to have an impact on profits. The latest clutch of first half results, from Europe and Asia, have shown millions of dollars lost on rising fuel. Singapore Airlines is among the latest to complain of spiralling prices, partially blaming its fall in operating profits on a 22% rise in fuel costs.
The price rise have been further emphasised by the recovery of the US dollar relative to key currencies such as the Japanese yen and deutsche mark.
Traditionally, fuel makes up around 10-11% of airline operating costs, but with the rises so far this year, some within the industry are saying that the percentage has climbed to closer to 14%.
Source: Flight International
