KLM Royal Dutch Airlines today said it would increase its fuel surcharge by €5 (US$6.05) each way on all long-haul flights, following American Airlines' surcharge increase yesterday on transatlantic and transpacific routes. American Airlines specifically did not raise surcharges on fares to and from Japan, but levied an additional $10-per-way fuel charge on other long-haul flights "with few exceptions."
The surcharges are the latest attempt by carriers to offset rising fuel costs. American Airlines said the surcharge is effective immediately, while KLM said it would enact the added cost on April 15 and would remove the charge "as soon as the barrel price drops below $65 for 30 consecutive days."
However, according to fuel forecasts, that relief is not expected in the near future. "Record crude oil prices, which are expected to average nearly $70 per barrel this summer, will hamper the industry's widespread efforts to reverse the losses that have plagued the airlines in recent years," said Air Transport Association vice president and chief economist John Heimlich this week in a statement.
ATA said the airline industry's total fuel bill more than doubled from 2003 to 2005 and increased $10.3 billion between 2004 and 2005. "In addition, the first-quarter price data suggests higher average prices throughout 2006 versus 2005," ATA said in a statement. "For 12 days in a row, the average price of jet fuel has exceeded $1.90 per gallon, and this past Friday, it reached its year-to-date peak of $2."
Domestic carriers last week also cited growing fuel expense when many moved to raise higher-end fares in certain markets
(BTNonline, April 6). Delta, which initiated the latest round of fare jumps and prompted others to match, today said that increase still is intact.
While fuel continually is given as justification for cost increases to travel buyers, Scott Gillespie, president of Solon, Ohio-based Travel Analytics, said fare increases in the past year have gone up disproportionately higher than have fuel costs. "The average fares have gone up about $12 in the past year; $8 of that can be attributed to the fuel costs," he said, citing research that examines fare growth between late March of 2005 to the same period this year.