British Airways on Wednesday plans to increase passenger fuel surcharges applied to long-haul tickets booked in the United Kingdom and North America. The new fee of £6 (US$11) per segment is more than double previous levels. Short-haul flights still incur a £2.50 (US$4.61) per segment fuel surcharge
"Fuel prices have risen by 45 percent in the past 12 months, and our fuel costs are expected to be £225 million (US$415 million) higher than last year," said BA CFO John Rishton. "We anticipate that the combined fuel surcharges will contribute £70 million (US$129 million) toward these costs."
Many international airlines this year successfully have implemented price hikes to offset the rising cost of fuel, whereas domestic U.S. carriers have not
(BTN, June 7). Absent full competitive matches, fare hikes in the domestic system have been rolled back. The latest price increase--a $5 per segment hike added by American Airlines--was rescinded early last week.
Though they face minimal low-cost competition on long-haul routes, large international carriers still generate criticism anytime they raise fares. "Rather than trying to spread the cost evenly amongst its customers, British Airways, as it did with its fuel surcharge announced in May, has chosen to discriminate against its long-haul customers," said BA rival EasyJet in a statement this morning. "Surely the price of fuel would impact all its flights and all its passengers, regardless of where they are flying." In pledging again to avoid passenger fuel surcharges, EasyJet said raising fares "simply reduces demand."
Meanwhile, the price of crude oil this week begins trading on the New York Mercantile Exchange at $43.95, after topping $44 during the past two weeks.
Separately, BA today posted a pre-tax profit of £115 million (US$212 million) in its first fiscal quarter, compared with a £45 million (US$83 million) loss in last year's SARS and Iraq war-damaged first quarter. "These are reasonable results, but currently fuel and employee costs remain our biggest challenges," said BA CEO Rod Eddington. The carrier said long-haul premium volumes continue to recover while short-haul markets remain weakened by price sensitivity.