High oil costs hit more airlines
Air France are joining other carriers in raising fuel surcharges
BMI, Air France and KLM are raising ticket prices to pass on rising fuel costs to their customers.
The Portuguese airlines Tap-Air, Portugalia Airlines and Air Luxor said they will take similar steps.
British Airways, Virgin Atlantic and Lufthansa have all recently said they would raise passenger fuel surcharges in response to record high oil prices.
Meanwhile, oil prices are becoming a concern for Asia Pacific airlines, the region’s aviation association said.
BMI raised surcharges from £2.50 to £6 on its six long-haul flights to the US and the Caribbean
Air France airline said a surcharge of up to 12 euros ($14.79, £8.09) per leg would be introduced, on top of a 3 euro fuel surcharge on tickets on 19 May,
Air France’s latest increase will see ticket prices go up from 24 August. Fares will increase by 2 euros per leg on domestic flights and 3 euros on European and North Africa routes.
On long-haul routes, the surcharge will rise by between 10 and 12 euros per leg, Air France said.
Portugalia Airlines general commercial director Maria Eugenia Silva said “if the price of petroleum continues to rise, we will have to increase the surcharge again”.
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The airline’s Dutch subsidiary, KLM, said it would impose a fuel surcharge of an average 3 euros per flight for all fares from 1 September.
Both Air France and KLM said the new surcharge would be dropped once crude oil prices return to below $35 a barrel for over 30 consecutive days.
Major airlines have been adding fuel surcharges to ticket prices or raised fares in response to higher fuel costs.
Earlier this month, BA said its fuel surcharge for long-haul passengers was to more than double from £2.50 to £6 per leg and Virgin Atlantic raised its surcharge from £2.50 to £6 for all flights sold in the UK.
On August 16, Germany’s Lufthansa said it was increasing prices by 2 euros on domestic flights and 7 euros per leg for long-haul travel.
Under review
High oil prices were increasingly becoming a concern for Asia-Pacific carriers despite healthy growth in passenger volumes and capacity, the Association of Asia-Pacific Airlines (AAPA) said on Wednesday.
Hong Kong’s Cathay Pacific has announced a fuel surcharge increase and Singapore Airlines said on Monday it was “actively reviewing” the situation.
Jet fuel is the second-biggest cost for airlines after labour and accounts for up to 20% of operating expenses.
Worries about the impact of high oil prices have weighed on airline stocks this year
By: Hand87_5 - 20th August 2004 at 13:09
The situation is quite different from the one in the 70’s.
I the 70’s the penury was organised by the middle east countries.
Today there is no penury , but some kind of irratiional psychose generated by an handful of traders. Believe me however , but people are making a bunch of money with it.
No penury but the FEAR of a potential penury….
By: Whiskey Delta - 20th August 2004 at 13:02
I’ll agree that the current oil crisis is a bit short of the 1973 energy crisis prices but there are quite a number of “new” issues. During the 1970’s in the US the airline industry was still regulated by the government so the swing in oil prices didn’t translate into lower profits for the airlines, at least not nearly on the scale that we are seeing now. Currently we have an outlandish excess of available seats in the industry which is the driving force of our low ticket prices (demand is up but supply is still greater = low prices). Low prices aren’t what you need when operating costs are rising. If an airline is able to squeeze out a profit now or in the future they are darn lucky. The problems of 2000’s are similar to those of the 1970’s only on the surface.
Here’s an interesting chart I found comparing the price of oil over the years adjusted for year 2000 dollars. In the US, the price of oil topped out at about $60 a barrel (adjusted) during the 1970 energy crisis.
By: LBARULES - 20th August 2004 at 12:10
For once Sandy, I totally agree with you 😀
By: Bmused55 - 20th August 2004 at 07:52
Do you know airlines are always moaning and groaning about the price of oil! BA is the worst culprit, they seem to making plenty of profit, so I wish they would cut the griping.
The present oil situation is nothing compared to the oil crisis of 1974 when prices trebled and bought down that lovely airline Court Line, I wish Id had a chance to fly on one of their pink tristars or a lime green Bac1-11!
Will you please shut up with your constant, senseless and unfounded BA bashing.
Yes, BA made a profit… but only a small one in relation to the size of the company.
The oil prices will currently add £200million onto fuel charges this year and next. And seeing that BA made less profit than that… they have reason for concern.
By: mongu - 19th August 2004 at 23:04
Everyone is feeling the pinch at the moment.
But oil prices have been high for a good few years now. BA have endured the high prices all along, and basically they got it wrong. They thought, 2 years or so ago, “hey, the oil price is so high, it’s gotta fall soon”
Other airlines took a different view “it’s high, but sods law it’ll go even higher”.
So the other airlines hedged against a price increase, and the extra £’s they paid for fuel were mostly offset by profits from their hedging activities. Ryanair did this.
By: LBARULES - 19th August 2004 at 20:42
Yeah, but couple it with the affects of 9/11 and all the terroist threats since…
By: danairboy - 19th August 2004 at 17:26
Do you know airlines are always moaning and groaning about the price of oil! BA is the worst culprit, they seem to making plenty of profit, so I wish they would cut the griping.
The present oil situation is nothing compared to the oil crisis of 1974 when prices trebled and bought down that lovely airline Court Line, I wish Id had a chance to fly on one of their pink tristars or a lime green Bac1-11!
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August 19, 2004 at 4:37 pm