Qantas to raise fuel surcharge: report

[Wirraway]

AAP

Qantas to raise fuel surcharge: report
October 12, 2004 - 9:24AM

Qantas Airways Ltd is set to raise its fuel surcharge for the second time in three months as oil prices continue to climb to record highs, it was reported.

The Australian Financial Review said Qantas was aiming to charge an extra $5 to $10 on international flights and could lift the domestic levy by a few dollars as well.

The AFR quoted Qantas chief financial officer Peter Gregg as saying that the airline would probably raise its prices this week saying the domestic charge could be lifted "by a few dollars".

"We are concerned about the impact it might have in the domestic market on demand," Mr Gregg told the AFR.

In late August Qantas raised the fuel surcharge on its domestic and international tickets by $4 and $7, respectively, because of the high price of oil.

This came after a surcharge of $6 on domestic flights was introduced in May.

Just prior to the August surcharge increase, Qantas reported a net profit of $648.4 million for 2003/04, a record full year net profit that was up 88 per cent or $304.9 million from the same period a year earlier.

© 2004 AAP

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[Don Esson]

Virgin are also making similar noises. With their cost structure being totally different to that of Qantas, someone in Canberra should be looking at the surcharge if it's the same as QF's. Same theory would apply to Jet*. If each airline levies the same surcharge, then something smells, and it's not GD's or BG's cologne.

[Wirraway]

Wed "Sydney Morning Herald'

Airline levies up - and no end in sight
By Alexandra Smith and Matt Wade
October 13, 2004

Qantas passengers will be slugged with the second fare price rise in as many months and could face more increases as the airline battles a $200 million fuel bill blamed on high oil prices.

The airline has locked in 70 per cent of its fuel at $US32 a barrel but, with fears that oil prices could push past $US54 a barrel, Qantas has indicated it will raise its fuel surcharges and cannot rule out more increases.

Domestic tickets on Qantas, Jetstar and QantasLink will carry a $13 levy (up $3 on the current charge), while a $32 levy (up $10) is likely to apply to international tickets, including for budget carrier Australian Airlines.

Qantas's chief financial officer, Peter Gregg, said he hoped the new surcharge would not deter people from air travel. The airline had no option but to increase the levy for the third time this year, he said.

Mr Gregg said Qantas had a $200 million fuel bill despite hedging its fuel and increasing the passenger surcharge. He expected a final decision on the extra surcharges to be made this week, even as early as today.

Virgin Blue has not increased its fuel surcharge but could follow Qantas's lead within days.

British Airways, Air France and Lufthansa have increased their fuel surcharges on long-haul flights, while other carriers, such as Air New Zealand, are expected to consider increasing their fuel levies within days.

The Australian Consumers' Association said the fuel surcharge would be unlikely to stop people booking flights because air fares remained fairly low, particularly in the domestic market.

But the association's deputy chief executive, Norm Crothers, said the "hidden extras" that kept creeping into ticket prices - including credit-card and booking fees - meant consumers were paying more than they expected.

The Australian Competition and Consumer Commission had no control over ticket pricing unless airlines operated under misleading or deceptive conduct, a spokeswoman said.

The relentless rise in the crude oil price will also keep upwards pressure on petrol prices, which analysts say could soon average more than $1.15 a litre in Sydney. Shell said its average pump price in Sydney yesterday was $1.04 a litre.

In some parts of the city service stations were selling petrol at above $1.10, the price monitoring firm FuelTrac said.

Bowser prices were likely to move higher in the next two weeks, a FuelTrac spokesman said.

"There is no respite in sight for motorists," he said.

He warned that a very cold winter in the northern hemisphere would boost demand for heating oil and trigger another significant rise in petrol prices before Christmas.

The benchmark oil price settled at a record high of $US53.64 a barrel on Monday night after touching $US53.80 during New York trading.

Meanwhile, Qantas and Air New Zealand will explore working together in a partnership that would not breach competition laws after the Australian Competition Tribunal approved an alliance between the carriers.

But yesterday's decision will have little impact, because the New Zealand High Court rejected the alliance last month.

The proposed alliance, which would have allowed the two carriers to co-operate on routes between Australia and New Zealand, needed approval from authorities in both countries.

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[Kaptin M]

Am I incorrect in assuming that fuel charges are a tax deductible expense - something written off against income?

Why are pax being charged, when the companies will claim this from the ATO at the end of the financial year?
Double dipping??

[Capt EFIS]

It doesn't matter which way you look at it, it's just another name for a price increase.

The price of oil is always going to go up and no doubt will not fall below the price it was a couple of years ago so why introduce a fuel surcharge, in a few years time the fuel surcharge will catch up with the price of the ticket.

Just reading an interesting thing in the paper a couple of days ago... If inflation was taken into account the cost of crude oil today is $US26.00 below the peak inflation-adjusted price reached in 1981.

So to Qantas, Virgin Blue, and any other airline introducing this surcharge..... don't play us for fools.....just raise the ticket price to cover the increases in costs and be done with it.

Cheers,

Capt EFIS.

[MoFo]

Marvellous little money spinner that, as Ritchie would say.

QF proudly tell us about their fuel hedging and how clever it is, in the annual report, but then apply fuel "surcharges".

A bit like banks charging "fees" to pay staff salaries when they make profits from their business activities like all other types of business.

Maybe we could have supermarkets charging a cashier "fee" to put the groceries through, or service stations charging a "pump fee' for providing those nice shiny pumps. The possibilities are limitless.

[Don Esson]

There is some honesty in life after all. SQ have declared in its first half 2004/05 results/outlook that though their fuel costs increased by SIN$333, there is more to that number than meets the eye.

Total fuel costs increased by $524 but $191m of offsets were achieved by exchange gains ($32m.) and 'higher hedging gain' ($159). The increases? 39.7% cost of fuel increase ($325m.) and, wait for it, 37.2% increase in the level of volumes uplifted ($199m.): more flying. So we therefore see that their huge cost incease is not soley the cause of price hikes.

Have the Qantas mob and Virgin considered any volume increases when assessing the levels of their surcharges? At least there is some transparency in Singapore.