Airlines refuse to rule out further fuel price hikes
IATA agm special report:Airlines have refused to rule out further rises in tickets if oil prices threaten to increase to unprecedented levels.
Members of the International Air Transport Association, meeting in Singapore this week, said the volatility of oil prices had to be mirrored with similar action on fares to keep costs in line.
Some carriers have increased fares or set a fixed surcharge per flight sector to combat the fuel crisis which has seen prices soar to $42 a barrel before slipping back to $38.
Singapore Airlines became the latest carrier to impose passenger surcharges per sector, following in the footsteps of British Airways, All Nippon Airways, Air France and Qantas.
Air France chief executive Jean-Cyril Spinetta said further rises could not be ruled out, stressing the situation had to be monitored carefully before considering another increase.
BA currently imposes a fuel surcharge of £2.50 a sector while SIA charges in dollars equivalent to around £3.50 per trip.
Many carriers are scrambling to hedge their fuel into next year to try to control costs, even though evidence in recent days has seen the oil price holding steady below the $40 mark.
IATA director general Giovanni Bisignani warned that collective airline losses were inevitable in 2004 for the fourth year running as the oil crisis had forced fuel prices up by 30% since last year.
The industry has raked total losses of $30 billion since 2001 and was on course to turn a profit this year, said Bisignani.
“Our projections of a $3 billion profit were based on an average oil price of $30 a barrel,” he said.
“If oil prices average $33, we break even. At $36, we could expect $3 billion losses.”
He warned that the higher fuel prices meant up to $12 billion in additional costs to the industry – half of which could be recouped through measures already outlined by carriers.
In a bid to reduce the impact on airlines, Mr Bisignani said IATA would mount an aggressive campaign targeting airports and air traffic control operators to cut user charges, while also trying to encourage more fuel-efficient shorter flying routes between cities.
Report by Updesh Kapur
Phil Davies
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