Airlines again hike ticket prices blaming fuel costs

27th April 2006, Comments 0 comments

PARIS, April 26, 2006 (AFP) - Air France-KLM, Singapore Airlines and a string of other carriers are increasing the fuel surcharge element in their long-haul ticket prices, again passing on to passengers the rising cost of aviation fuel.

PARIS, April 26, 2006 (AFP) - Air France-KLM, Singapore Airlines and a string of other carriers are increasing the fuel surcharge element in their long-haul ticket prices, again passing on to passengers the rising cost of aviation fuel.

The airlines justify the price hikes by the recent surge in crude prices, sparked by fears that the international crisis over Tehran's nuclear programme could trigger disruptions in supplies from Iran, the world's fourth largest oil producer.

The price of crude hit an all-time high of over US $75 a barrel on April 21. In early afternoon trading in New York on Wednesday it was changing hands at US $72.15 a barrel.

Singapore Airlines announced on Wednesday it was slapping an extra US $10 dollars (EUR 8) onto the price of certain long-haul flights.

Air France will on Saturday raise its fuel surcharge by EUR 7 (US $8.70) — the sixth increase since the carrier introduced a fuel supplement in May 2004.

That puts Air France's fuel surcharge up to EUR 51 per one-way long-haul flight, from EUR 44. And since most travellers buy return tickets, the result is a surcharge of EUR 102 per round trip.

Dutch carrier KLM, which was bought by Air France in 2004, upped its fuel surcharge by EUR 5 (US $6.2) to EUR 45 earlier this month.

Five other European airlines introduced similar increases during April — British Airways, German carrier Lufthansa and its subsidiary Swiss, TAP Portugal and Spanish carrier Iberia.

The rise and rise of crude oil prices is an unwelcome development for airlines, some of whom now say fuel has become the most expensive item on their budgets.

Last year their overall fuel bill rose 50 percent to US $92 billion and this year it could be higher still. As a result, the industry made a loss of US$6 billion in 2005 despite a strong increase in air traffic, according to the International Air Transport Association (IATA).

Despite colossal efforts to slash costs, the industry is expected to make a loss of US $2.2 billion this year and only return to profit in 2007, the IATA says.

In the meantime, sky-high crude prices are continuing to play havoc.

US low-cost airline JetBlue Airways announced on Tuesday it was delaying the delivery of 12 A320 planes and hoped to sell off another five, after plunging into the red in the first quarter of 2006.

Other airlines are managing for the moment to limit the damage by resorting to "fuel hedging", or buying their kerosene in advance so as to soften the fluctuations in price.

For example Air France-KLM, whose fuel bill is forecast at EUR 3.5 billion for the 2005-06 fiscal year, is covered for 84 percent of its fuel needs for the period, at a cost of US $39 a barrel.

But the group is steeling itself for difficult times ahead — its coverage is set to dip to 62 percent in 2006-07 and sink to just 34 percent in 2007-08.

Copyright AFP

Subject: French news

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