On Dec. 27, Virgin Blue became the first of the two major airlines in Australia to raise its fuel surcharges, adding AU$5 to the cost of each domestic flight and AU$10 to international sectors.

The decision means Virgin Blue's surcharge rises from AU$19 per person per sector to AU$24 on domestic routes and from AU$35 to AU$45 per sector on international flights operated by Pacific Blue and Polynesian Blue.

The airline said its domestic surcharge was still below the levy imposed by Qantas and that it had held off from increasing it for three years.

Qantas surcharges are AU$26 on a domestic flight and AU$65 to go across the Tasman. It adds AU$185 for a flight to Europe, AU$145 to North America, South Africa and India and AU$105 to Southeast Asia and Hawaii.

Since Virgin Blue's last increase in April 2005, the price of jet fuel had increased from US$66.33 a barrel to US$112.60 a barrel.

Virgin Blue spokeswoman Amanda Bolger said there was no evidence that fuel prices would fall in the near future.

She said the new surcharge would not come into effect until Feb. 1 to give travellers time to make bookings under the current surcharges.

"If people ring up now and make a booking for November next year or April or whatever, they'll get the current fuel surcharge level," she said.

"So it's for bookings after February and we are trying to give people a month's notice."

Qantas has also been watching fuel prices carefully and said on Dec. 27 that it would continue to do so.

The flying kangaroo's fuel bill is heavily hedged and it would find itself in a delicate position if it increased surcharges after recently announcing it expected its pre-tax profit to be 40 per cent higher than last year.

Qantas has also been hauled over the coals because of its participation in a price-fixing cartel relating to freight fuel surcharges.

The airline was last month fined US$61 million (AU$70 million) by the US Justice Department for its role in the scandal and this week confirmed it was one of 25 airlines to have been given two months to provide an explanation to Europe's anti-trust regulator.

The latest European Union inquiry is focused on claims of criminal behaviour by the freight arms of the airlines and European Commission spokesman Jonathan Todd has called the "please explain" notes official charge sheets.

Qantas said on Dec. 27 that it was one of a number of airlines to have received the statement, which it considered a confidential document.

"We are considering it and have two months in which to respond," it said.