Qantas trims fuel surcharge by $5

[airbusthreetwenty]

Qantas trims fuel surcharge by $5

Colin Kruger
January 16, 2007 - 2:20PM

Qantas has announced it will reduce its fuel surcharges on all domestic flights and some international flights from next week but only by a paltry $5.

Domestic surcharges will drop to between $24 and $26 while surcharges on flights to Asia and the Pacific will be reduced from $105 to $100.

There will be no change to surcharges on flights from Australia to Europe and the United Kingdom, and from Australia to the US, Canada, South America, South Africa and India.

"We reduced international surcharges in October and we have been monitoring oil prices closely since then," the airline's executive general manager John Borghetti said.

The price of oil has dropped by 30 per cent in the past six months.

Stockbrokers upgraded their profit expectations for the airline last week based on lower costs flowing through from the drop in oil prices, but Qantas said it was still losing money from the rise in oil prices.

"Despite hedging and surcharges, we are still under-recovering the cost of fuel price increases by hundreds of millions of dollars, even with the recent drop in jet fuel prices," Mr Borghetti said.

The recent fall in oil prices is expected to help Qantas beat the profit upgrade it made on December 1, when it said it expected to top its 2005-06 result by 25 to 30 per cent, "subject to fuel prices remaining around current levels".

The upgrade, which analysts attributed to strong international and domestic conditions, lifted Qantas's forecast 2006-07 profit to between $835 million and $870 million. If oil prices stay at current levels, however, the airline could be on track to better the record $914 million pre-tax profit posted in 2004-05.

A Macquarie Equities broker report last month estimated every $US1 fall in the price of a barrel of oil would equate to an extra $13 million of additional annual net profits for Qantas.

Qantas has previously stressed that, while oil prices had fallen, the refining margin on aviation fuel was still high. The price of a barrel of Singapore jet fuel has fallen from $US93 to $US71 since August.

After raising its surcharges six times since May 2004, Qantas first reduced the surcharge on international flights in October when the price of oil dipped below $US60 a barrel.

Qantas chief executive Geoff Dixon said the airline chose to add surcharges rather than increase fares "so that we could reduce or remove the additional charge".


http://www.smh.com.au/news/business/qantas--trims-fuel-surcharge-by-5/2007/01/16/1168709736888.html

[B A Lert]

Qantas chief executive Geoff Dixon said the airline chose to add surcharges rather than increase fares "so that we could reduce or remove the additional charge"

What absurd spin. There is no reason why fares can't rise and fall apart from the fact that Qantas does not want to pay a commission on the surcharge. Some of these blokes make Ned Kelly or Peter Foster look as though they have integrity.

[roamingwolf]

Hey BA I like your last line. Now everytime I see GD I will think of Peter Foster but to be totally francis I reckon Ned Kelly had some integrity unlike the Vict police force (at the time I meant :hmm: )

[Chimbu chuckles]

At typical burns for a 767 you'd use 34000 odd kg of Jet A flying between Sydney and SE Asia...roughly 75000lbs at roughly 600 liters/1000lbs thats 45000 liters...at Usd0.45/liter from the above post thats about USD20k each way.

At A$100/pax x 200 pax that's Aud20k each way...so roughly 75% of the TOTAL FUEL COST is covered by the fuel levy alone:hmm:

The figures would be even better for the 744 as you double the pax but only probably increase the fuel by about 60%.

I'd say there can be no doubt they are making a healthy profit on the fuel levy when it covers 70-80%+ of the total burn...nice bit of spin.

[Eastwest Loco]

Dixon saying they chose to add fuel surcharges rather than increase fares is a total crock.

What the rat did was avoid having to justify it thru the ACCC and avoid having to pay commissions or flown revenue overrides on fuel surcharges, despite quite a few carriers including EK loading the surcharge as Q entry in the fare build line which is commissionable.

As for the fares, there are instances on a daily basis where the OPTWEBU O class fares vary 4 times to the tune of hundreds of dollars over a 24 hour period. Dont give me no fare increases (or decreases). That is a straigh lie.

Regional Ratlink flights running 75% load factor on 1 -2 hour sectors are actually paying for the entire fuel burn with the fuel surcharge and providing a profit over and above total cost.

So where in hell are the snooping jouros who try to get a headline about a gay aboriginal radioactive whale being inconvenienced by Chinese based carrier not using noise abatement procedures properly on Thursdays in months without R in them on this front.

Could it be Rat Inc spends so much money advertising in their rags that they are not allowed to make the general public aware?

You bet your left goolie it is (left inboard if female of course) and rest assured if it was a startup in the ealy days they would be all over it like a bad suit.

Prove me wrong journos. You are quick enough to milk this site for your own benefit so try to give something back.One of you sods must have a spine.

EWL

[404 Titan]

I notice on the news tonight that today’s oil price is the same as what it was in June 2005 when the QF fuel levy on Domestic and International travel was $12.00 and $29.00 respectively. After today’s announcement the levy is $21.00 and $100.00 respectively but still $105.00 to the US, Europe/UK & Sth Africa etc. This is clearly a cash grab by QF and all the other airlines that are ripping off their customers and staff. I'm also glad the ACCC and also the government are now going to take them on like the big fuel companies. The government should threaten QF with complete open skies unless they reduce their fuel levy to June 2005 levels. This I’m sure will get their attention.

On a separate note, the whole idea of fuel surcharges is a joke. It is a cost of delivering the service (air travel) and should be reflected in the total cost of a ticket. This is only a ploy by the airlines to reduce commissions to travel agents and hide real profits and hence taxes from governments and shareholders. The government should stop airlines using this rort in Australia period. It is immoral and I would say bordering on being illegal.

[B A Lert]

Well writ and said EWL!

The people today posing as 'journalists' are no better than many of the work experince kiddies at Qantas except that the latter have a gurdian angel or two who are able to offer the spin. Most journos wouldn't know a good story if they had one placed under their noses nor would they have the gumption to be able to research a story so as to determine fact from fiction. After all, we only have to look at the way in which ALL of the media are ingnoring the imlications of this blatant rip off even though Maq Bank has reassessed their profit forecast based on fuel prices and the surchrges collected. The facts almost speak for themselve.

BTW, I bet that Jetstar are piggy-backing on Qantas's fuel cointracts and are paying precisely the same for its fuel as Qantas. How come they have a lower surcharge? Not only that, aren't their International fares fully inclusive or presented in such a way that it's impossible to determine what their fuel levy is? I told you that the little Irishman had more than a touch of the smarts!

[Eastwest Loco]

B A lert - the fuel surcharges are quite evident in a fare construction line.
If your ticket is issued by a real Travel Agents, not a Blight Centre that doesn't issue E ticket receipts with fare constructions visible, then the surcharge amount is clearly visible in the fare build line after the routing as a dollar value is shown there with a YQ after it on most carriers - 156.28YQ or similar.
If the carrier pays commission on fuel surcharges such as EK the it will be in amongst the port pairs in the fare build as a Q tax but this is in NUCs (neutral units of currency) that are directly locked on a 1 for one basis to the USD.
In this case the earlier part of the fare build would read something like:
SYD EK DXB 734.21 Q75.00 EK DOH 231.87 Q20.00 etc.
More to the point if anyone would like me to decipher a fuel surcharge, just give me a call bh 1800 067 207 or after hours 0419 323989.
Easier than the full distaster on here.
Best all
EWL

[Bleve]

In this thread:

http://www.pprune.org/forums/showthread.php?t=231244&page=2&highlight=surcharge

I did some back of the envelope calculations and concluded that:

- QF pays about $0.61 per litre for its fuel.
- The Domestic surcharge of $31 buys 40kg of fuel, this appears to cover the total cost of domestic fuel.
- The Tasman surcharge of $56 buys 73kg of fuel, this appears to cover the total cost of tasman fuel.
- The International surcharge of $98 buys 127kg of fuel, this covers about 40% of the cost of international fuel.


Note that the numbers used were those at June 2006. Nevertheless what it shows is that domestic and tasman pax are paying for all their fuel and the international pax 40% of their fuel. That would appear to more than cover the increase in fuel costs.