Oil prices prompt Qantas to increase surcharges 50pc

QANTAS will raise fuel surcharges from February 19 between US$20 to $50 on international passenger routes for the first time since 2008 in response to rising oil and jet fuel prices.


Fuel charges on UK and Europe routes will increase 53 per cent from $95 to $145 on one-way tickets. Flights to mainland USA, Canada and South America, South Africa and India will increase from $85 to $115. Asia, Pacific and Honolulu routes will increase by $20 to $75.


Australia's largest carrier dropped domestic and Tasman fuel charges in January 2009, but the situation is now under review once more.


"Year to date average prices for both West Texas Intermediate Crude Oil and Singapore Jet Fuel are at their highest since 2008, and second half 2011 prices are forecast to be around 20 per cent higher than in the first half," said Qantas CEO Alan Joyce.


"The price of Singapore Jet Fuel, for example, has increased from an average of US$88 a barrel in September 2010, to $110 a barrel in January 2011, and is $117 a barrel today, he said.


Mr Joyce forecasts second half 2011 prices for Singapore Jet Fuel and West Texas Intermediate Crude Oil as higher than first half by 20 per cent.


"Even with a conservative but robust fuel hedging policy, our business will continue to be exposed to this significant cost increase," Mr Joyce said, adding that further changes cannot be ruled out.


Qantas has hedged 66 per cent of its remaining fuel requirement in 2011 at a worst-case crude oil price of US$93.06 per barrel, including option premium.


Qantas wholly-owned subsidiary Jetstar will not reintroduce fuel surcharges and remains committed to offering the lowest fares. Jetstar will address the impact of higher fuel prices via adjustments to airfares in selected markets and increases in ancillary revenue, including baggage charges.


During Mr Joyce's agenda speech for 2011 its freight division performance was noted for its strength despite recession and its focus on business in Singapore, Bangkok, and Shanghai, along with a recent launch of Seoul-Miami service. Qantas Freight is also now marketing Jetstar Asia belly-space.
(Source:http://www.schednet.com)