Qantas $6 Fuel Surcharge

[Yeah..Whatever]

This has just been relased to the Market.

SYDNEY, 11 May 01: Qantas said today that it would introduce a fuel surcharge on passenger tickets sold after midnight on 17 May due to a substantial rise in jet fuel prices.
The CEO of Qantas Airways, Geoff Dixon, said fuel prices were currently about US$44 a barrel, the highest level for 14 years.

“Fuel represents about 15% OF Qantas’ costs last year, the second largest cost to the group after salaries and wages,” Mr Dixon Said.

“The US dollar price of jet fuel is almost 60% higher than it was 12 months ago – US$44 a barrel compared with US$28 a barrel – and this has significantly increased the cost to our business”

Mr Dixon said the main reason for the jump in fuel price was continuing tensions in the Middle East and strong global demand, particularly from the United States of America and China.

He said the last time Qantas introduced a passenger fuel surcharge was in late 2000 after jet fuel prices spiked to more than US$43 a barrel in October 2000 due to surging global demand.

The fuel surcharge will be $6 per sector for Qantas domestic, QantasLink, Jetstar and domestic NZ services and $15 per sector for Qantas International services and Australian Airlines




What I find interesting is that I was under the belief that Qantas had there fuel prices hedged at US$28 until the start of 2005.

If Qantas are hurting then VB must be feeling the squeeze as there fuel is unhedged.

[The Enema Bandit]

This will have the Virgin whingers come out and say that Virgin are the good blokes because they aren't going to do it.

[High Altitude]

I'm sure I read somewhere that the barrell price was on the way down?

Try fillen your car in Darwin... $1.02 cpl...

[Woomera]

Oil hit a new high last night at US$39.80 per barrel. The prognosis is still further increases. :{

The drop in the Australian Dollar last night to slightly under US$0.70 cents, further agravates the domestic price of fuel.

Woomera

[stiffwing]

The amusing aspect of such a levy is the fact that the fuel that QF is currently pumping in was purchased between 18 months and 3 years ago. QF (as with many other large airlines) have a very proactive fuel hedging team that pre-purchases fuel when the price is right as with any commodity. QF would not be using $USD 44/ barrel at the moment as Mr. Dixon alluded to (Anyway, when would they pay the market rate for fuel ?... I'm sure a 15 - 20 % discount on the $44 would be achieved pretty easily). Smoke and mirrors...

[MoFo]

Oil at us$44.00 per barrel. Where did Dicko dream that up from. Yesterdays price was a tad over us$38.00 per barrel. And OPEC announced production increases to help the supply situation.

The Aussie dollar at 70c us is hardly new either. And what about that clever fuel hedging they claim to have in place in the annual report.

The media gave him a free kick on this one. Announcing it at/after the Jetstar launch while the Media throng were into the free p*ss was a stroke of genius. Also Virgins mouthpiece is very quiet. Probably getting in line on this one.

[Patriot One]

A spokesman for Virgin Blue yesterday reacted swiftly by denying that they bought their fuel in barrels "this is another attempt by QANTAS to rip-off the Australian travelling public. Go to any airport in Australia on any day and you will see QANTAS and Virgin Blue planes pumping their fuel straight out of the ground. I ask - nay, demand - that Mr Dixon reveals the whereabouts of these barrels of oil!" he said quite emotionally. "And another thing - we're the smartest airline in the world. We don't use oil - we use kerosene!".

When asked whether VB had a hedging policy Mr Godfrey replied "hedging?..hedging?..I'm not hedging - I'm being quite honest!".

VB shares fell to an all time low yesterday of $A2.10c - quite good really!

[Pinky the pilot]

High Altitude; Last Friday (7th) unleaded varied from
99.4 cents to $1.04/ liter in Adelaide whereas in my area (Riverland) it remained stable at around 99.9cpl
It has been up to $1.02/liter here on occasion. However; my ancient 74 mod. Celica with a somewhat worked twin cam in it needs the 99 octane unleaded and that's $1.05 /liter
I'd rather have avgas but that's another story.

You only live twice. Once when
you're born. Once when
you've looked death in the face.

[johhnyrelegate]

We're on $1.13 for unleaded here. Surely someone can beat that. Kind of like an auction really.

And sorry to steal the thread if that happens, but it was a bit boring really.

[Rich-Fine-Green]

I was under the impression that QF had 50% hedge @ US$28-$30 until '05. A logical each-way bet as a quick Iraq/Afgan solution may have dropped oil under US$28.

Therefore 50% of their supply is floating. No wonder QF is getting nervous.

Maybe VB has fully hedged and is not under as much pressure to introduce a surcharge as yet.

Please advise if above is not correct.

[Woomera]

Oil was quoted at US$40.77 this morning and still appears to be rising. (Aust$1.00 = US$69.94)

What is a barrel of oil?

Oil is sold between countries in quantities called barrels. (The same measurement is used to sell whisky.)

One barrel of oil is the same as:

159 litres (about 80 large fizzy drink bottle)
35 gallons (enough to fit in the petrol tanks of about 4 cars)
280 pints (a lot of bottles of milk)

The weight of a barrel depends on where the oil comes from. However, there are about 8 barrels in a tonne.

You could fit nearly 2 million barrels of oil into a football stadium - or one and a half tankers. This is how much oil the UK uses every day.

So, in relative terms, one liter of crude oil costs Aus$0.366 cents at todays price of US$40.77 and Australian dollar exchange rate of US$69.94.

In fairness, much of the pump price of fuel consists of taxes - excise and State tax. If you followed the recent Budget you will realise the taxes on aviation fuel funds the Civil Aviation Safety Authority.

Woomera

[Capt Claret]

Perhaps QF in paying in advance to hedge their fuel bills, take advantage of the "profit" when prices are low, or levy a surcharge, to cover the cost of capital tied up in fuel?

[lame]

Qantas cashing in on hype: Fueltrac

May 13, 2004 - 4:05PM



A fuel-industry monitor said the nation's consumer watchdog should investigate the introduction of a fuel surcharge to the cost of Qantas fares.

On Tuesday, Qantas announced it would impose a surcharge on all domestic and international flights, citing a 60 per cent rise in jet fuel prices over the past year.

But Geoff Trotter, general manager of price-monitoring company Fueltrac, said the airline was cashing in on media hype surrounding the spiralling cost of crude oil.

He said that justifying a hike in the cost of plane tickets on a surge in the global price of oil was incorrect and misleading, and he called on the Australian Competition and Consumer Commission to investigate.

"It's a pretty good strategy within the current climate of record highs (in the price of oil) - but we are forgetting that the planes run on jet fuel and not regular crude oil," he said.

"While jet fuel prices have indeed risen over the past several years, the rise in the Australian dollar versus the US dollar has more than offset these increases.

"Most large purchasers of jet fuel in Australia buy this commodity in US dollars and Qantas is no exception".

Analysis from Fueltrac found the price of jet fuel in Australian dollars per barrel had actually fallen over the past 12 months.

Mr Trotter said he also questioned the legitimacy of the surcharge given that Qantas contracted fuel at a fixed price, which was not subject to short-term variations.

From Monday, passengers booking domestic flights on Qantas and its cut-price subsidiary Jetstar will be hit with a $6 one-way fuel surcharge.

A $15 one-way surcharge will apply to all international flights, including those on its budget carrier Australian Airlines.

[Capt Claret]

13 1050Z, Sky News

Virgin Blue announces $6/sector fuel surcharge for bookings made after midnight Monday. $10/sector for Pacific Blue!

[Woomera]

Further price increases "in the pipeline". This morning (Friday) oil was US$41.08 per barrel and the exchange rate US$0.6882.

Woomera