Lufthansa on Monday increased its fuel surcharges,
and similar moves by other airlines could be on their way after oil prices on
Tuesday hit a two-year high in New York at $87.63 a barrel. The German flag
carrier raised its surcharge by €3, to €24 per sector, on flights within Europe
and to North Africa, Israel, Lebanon and Jordan. For all other routes, including
those to North America and India, it upped the surcharge by €5, to €87 per
sector.
"The price of crude oil has increased since the summer, so the fuel
surcharge had to be adjusted accordingly," according to a Lufthansa
spokeswoman. Yesterday's increases wipe out a downward adjustment Lufthansa
made in June, returning its surcharges to the levels they had been for most of
the last two years.
Meanwhile, almost all Chinese carriers on Oct. 26 raised their
surcharges by as much as 100 percent for domestic flights.
Bob Brindley, vice president for BCD Travel consultancy Advito, warned
that more airlines are likely to follow. "Fuel surcharges played a part in
the last round of airline responses to oil price increases, so I expect they
would do it again," he said. "In some countries, surcharges are not
impacted by aviation taxes, so any increases go straight to the bottom line
because they are not part of the base fare. Airlines are also enjoying more
pricing power in the marketplace, and demand is relatively high, so that will
improve their ability to pass on these cost increases."
Brindley
supported general press commentary suggesting that much of the recent rise in
oil prices can be attributed to the weakening of the dollar during the past few
weeks. However, the World Energy Outlook 2010, published Tuesday by the
International Energy Agency, forecast oil would continue to rise over the long
term. Predicting that oil demand would climb to 99
million barrels per day in 2035 from 84 million barrels in 2009—with almost
half the increase coming from China—IEA said it expects the price to climb to
$113 per barrel during that period.
Lionel Therond, an oil analyst with corporate financial services company
Fox-Davies Capital, told BTN he does
not anticipate oil prices will rise much higher in the near term. "We expect
the price to stay within the $70-$90 range within the next year, and then
probably move up to $100 within two years," he said. "There are still
weaknesses in the economic recovery, and overcapacity among oil producers is
putting a dampener on prices."