Qantas Passes Fuel Pain to Passengers
By Steve Creedy, The Australian | Aug. 19, 2006
Qantas will almost double fuel levies on direct flights to Britain and Europe as it transfers the pain of higher fuel prices to passengers.
Travellers to Europe who do not stop off will find themselves paying $185 extra each-way for tickets booked after August 31, up from $98 previously.
But those who break their journey will find themselves slightly better off, paying $11 less than the $196 they would have paid for two sectors under the old system.
Passengers flying to the US will now pay $145 one-way, up 47per cent, while trans-Tasman travellers face a 16 per cent one-way increase to $65.
The one-way surcharge on flights to Asia will rise more than 17 per cent to $115.
The new surcharges are based on distance travelled and apply only to international routes at this stage.
The airline is among several carriers to recently announce fuel surcharge increases, including Japan Airlines, Singapore Airlines (on Singapore-North America flights) and Thai Airways International.
The airlines are targeting certain routes according to the impact, making it difficult to compare levies, but the $145 Qantas levy on a Sydney-Los Angeles flight compares with asurcharge of $US90 ($118) persector on a Singapore-Los Angeles trip.
Qantas executive general manager John Borghetti said last night the new surcharges would still not cover "anywhere near" the rise in fuel costs to Qantas.
But Mr Borghetti would not say how much of the airline's additional fuel bill would be offset by the new surcharges, claiming it was "commercially sensitive".
Benchmark Singapore jet fuel has increased from $US40 a barrel, when the first fuel surcharge was introduced in May 2004, to about $US90 a barrel now. This is expected to cause the airline's fuel bill to rise to$3.9million this financial year, up from $2.8billion in 2004-2005.
Fuel was the main villain in a 30 per cent fall in annual profit at the airline, and behind predictions by some analysts yesterday that Qantas would be unable to match its $480million 2005-06 net profit this financial year.
"The point is you can't absorb costs like that," Mr Borghetti said. "We have to, unfortunately, pass that on.
"It's the old story, no matter what business you've got: if your biggest expense item doubles you've got to do something."
He said Qantas was closely monitoring demand for any adverse consumer response.