Qantas and Virgin Blue unlikely to reduce fuel surchages
AAP reports that despite a recent fall in global oil prices, airlines Qantas and Virgin Blue have indicated they won’t be moving any time soon to cut the fuel surcharges on their airfares.
So far, only rural carrier Regional Express has reduced its levy in response to lower fuel prices, but the airline said today it was too early to make a second reduction.
Crude oil, from which jet fuel is derived, is currently trading around $US102 a barrel, significantly lower than its record levels above $US147 a barrel in July.
Singapore Airlines has reduced ticket prices for some international flights and consumer group, Choice, has urged Qantas to review its fuel levies.
But Qantas said today that despite the easing of oil prices recently, the oil market remains volatile.
“While there has been some downward movement in the price of oil, the market is still volatile,” a Qantas spokesperson said.
“The last time Qantas announced an increase to fuel surcharges was on January 7.
“At that time, the price of crude oil was $US95 per barrel. Today crude oil remains around $US105 per barrel.
“At current prices even with fuel hedging measures in place, the Qantas group’s fuel bill will be about $1.5 billion higher this year than the previous financial year.”
Virgin Blue said it is watching the movement in fuel prices closely and is reviewing its position.
“From Virgin Blue’s perspective, we would like nothing more than to do so and are watching closely and reviewing our position,” Virgin Blue spokeswoman Amanda Bolger said.
Regional Express reduced its fuel surcharge by $4 to $40 on August.”
“We obviously monitored what had happened through July and between the beginning of July and the later part of July we saw the fuel prices ease throughout that month,” Rex general manager, network strategy and sales, Warrick Lodge said.
But Mr Lodge said it was too early to cut the fuel levy again given a falling Australian dollar exchange rate, which has cancelled out the savings made on the lower fuel prices.
“Since August 1 we have nearly seen a comparable fall in the jet fuel price to the exchange rate in percentage terms,” he said.
“So that weaker Australian dollar, which is down at around 80 US cents, is actually taking away some of the benefits in the jet fuel reductions as its purchased in US dollars.”
Mr Lodge said since the beginning of August there had been around a 13 or 14% reduction in jet fuel, about the same reduction as there has been in the value of the Australian dollar.
“So those two things since August 1 lead us to conclude that it is really too early to follow that first fuel levy reduction up with another one already.”
A Report by The Mole from AAP
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