Travel to cost more, more airlines mull fuel surcharge

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Travel to cost more, more airlines mull fuel surcharge

Air travel will cost more as several international carriers are likely to introduce fuel surcharges in line with a similar move by Emirates, the Arab world’s largest airline.

By (Issac John)

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Published: Wed 20 Apr 2011, 12:41 AM

Last updated: Tue 7 Apr 2015, 10:19 AM

Effective April 18, Emirates introduced a fuel surcharge to fares on all sectors in the wake of a steep oil price surge.

Abhay Pathak, Air India’s Regional Manager for Gulf, Middle East and Africa, said the carrier has no other option but to follow suit. “In a week’s time, we will review and unveil our new fares. So far we have been resisting the idea of hiking fares despite a sharp surge in fuel prices. Now it has come to a stage when we cannot absorb the full impact of the escalating fuel cost without passing a part of it to passengers.”

An Etihad spokesman said the airline would continue to monitor the situation “market by market”. He said adjustments to fares in a small number of markets, including the UAE, were made last month.

“Rising fuel costs are a challenge for all airlines and remain a significant proportion of Etihad’s total costs, in the region of 40 per cent of our total operating costs,” he said.

He said the Abu Dhabi-based carrier manages the impact of fuel price fluctuations with an aggressive fuel hedging policy that was introduced in 2007, and at present we are hedged at significant level for the year ahead. “This helps to mitigate some of the risks associated with fluctuating, and in this case, increasing oil prices.”

Housam Raydan, Corporate Communications Manager of Air Arabia, said the low cost carrier would continue to monitor the impact of escalating fuel cost on its operation on a daily basis. “We will announce our stance on fares as soon as we take a decision on how to respond to the fuel price hike.”

An airline industry source said the surcharge introduced by Emirates did not apply to redemption bookings. “Bookings made before the April 18 deadline remain free from the surcharge if they are ticketed by April 30 while all existing tickets can be used without paying the surcharge as long as at least the first segment has been flown by April 18.”

In a statement, Emirates said it had absorbed substantial costs caused by oil fluctuations. “Due to the current volatility of oil prices, Emirates is introducing a fuel surcharge to reflect the substantial recent increases in our fuel costs. Emirates has already incurred substantial costs by absorbing the recent price rises, but the surcharge gives us the ability to respond faster to market conditions, rather than a lengthier process of incorporating them into fares. The changes will also give us the ability to decrease prices quickly, where appropriate. We will review the level of the surcharge on an on-going basis, while remaining committed to providing our customers with excellent service and a strong value-for-money proposition.”

On the South Asian sector, the increase in surcharge ranges from Dh40 for an economy class ticket and Dh130 for business or first class one way.

On the US sector, a one-way economy ticket will cost an additional Dh150 and Dh520 for those in business or first class. This means a return business class ticket on US route will cost Dh1,040 more. For those travelling to Europe, Africa, the Far East, Australia or New Zealand, the fuel surcharges each way will be Dh80 for economy and Dh160 for business and first class passengers.

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