Airlines won't cut fuel surcharges

Airlines won't cut fuel surcharges
By admin


Qantas and Virgin Australia have no plans to cut the hefty fuel surcharges slugged on airline tickets despite steep falls in oil prices.

The airlines argue the 30 per cent slide in oil prices hasn't actually saved them much on their jet fuel bills.

Oil prices have slumped from around $US107 a barrel in July to around $US70 a barrel amid an oversupply in the market.

But Qantas says the price falls have shaved only $20 million off its $4.5 billion annual fuel bill.

Geoff Trotter, from monitoring group FuelTrac isn't buying it.

"The fuel surcharge should be at least 20 per cent lower based on the movement since July this year," he said.

"They are buying the fuel now really cheap, but their passengers are paying the same surcharge they paid when oil was $US112 a barrel."

Fuel price surcharges, which were introduced in 2004 amid a spike in oil prices, are a bigger deal for passengers than you might think.

Qantas customers booking a return economy trip the US are hit with a $680 surcharge, which is roughly a third of the cost of the ticket.

It also slugs passengers travelling to Europe, parts of Asia, and the Middle East, with the amounts depending on whether the ticket is for economy, premium economy, business or first class seats.

But the airline says the surcharges don't even cover its fuel bill.

"Fuel prices have more than doubled over the past decade and Qantas's current surcharges do not come anywhere close to recovering the cost of fuel to our bottom line," a spokesman said.

The airline says fuel prices will need to say low for a lot longer before it would consider cutting its surcharge.

"There would need to be a much more sustained and significant benefit before we would be in a position to revisit our surcharges," the spokesman said.

But Mr Trotter said the airline had lifted its fuel surcharge for US flights fourfold since 2004, while crude oil prices were only 33 per cent higher than a decade ago.

Virgin Australia imposes surcharges on flights to the US, Europe and the Middle East.

It says it works the fuel cost into the price of tickets on domestic routes, though it also says it has no savings to pass on to passengers from the lower oil price.

"Virgin Australia continually reviews its surcharges; however we have no changes to announce at present," the airline said in a statement to AAP.

"We look for a sustained trend in fuel price movements to increase or decrease our surcharges."

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