Qantas blames fuel prices for another increase in levy
A report in the SMH says that Qantas’ fuel surcharge to Europe is now six times more than when the airline introduced the levy in May 2004.
The national carrier yesterday followed the lead of other airlines, including Singapore, to announce increases in its fuel surcharge, with the levy on a one-way flight to Europe increasing from $170 to $185.
The levy on flights to the Americas, South Africa and India increases from $133 to $145 and for Asia and the Pacific (excepting New Zealand) from $100 to $105.
The chief executive of Qantas, Geoff Dixon, said the surcharges were close to or below their August levels. “Should the fuel prices drop, we will reduce the surcharges, as we have done on two separate occasions in the past 10 months,” he said in a statement. “The price of jet fuel has increased by more than $US17 per barrel since the last adjustment.”
Qantas reduced the surcharge on a European flight twice last year – from $196 to $185 in August and from $185 to $170 in October. That amounted to a 13 per cent reduction, after crude oil prices had dropped by more than 25 per cent.
When Qantas introduced the surcharge in May 2004, with Texas crude selling at about $US40 ($57) a barrel, it charged an extra $6 on a domestic flight and $15 for an international flight (or $30 for the two sectors to Europe). Since then crude prices have nearly doubled to $US78 ($90) and the European levy is six times more.
“Qantas has always under-recovered its additional fuel cost through a surcharge,” a spokesperson said. “This was the case in 2004 and remains the case now … and Qantas has experienced a $500 million rise in its fuel between 2005-06 and 2006-07.”
Crude prices have jumped from $US54 at the start of the year.
“Despite our robust fuel hedging policy and surcharges, we are nowhere near covering the additional cost to our business of the high fuel prices,” Mr Dixon said. “At current forward prices, and after hedging, the Qantas Group’s fuel bill for 2007-08 will be more than $300 million higher than 2006-07, despite the benefit of the stronger Australian dollar.”
After its March profit upgrade, Qantas was expected to report a full-year $939 million pre-tax profit. Analysts at the time expected the figure to be closer to $1.1 billion.
Report by The Mole
John Alwyn-Jones
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