Airlines raising fuel surcharges

by William ASTON on July 22, 2009

Several airlines including Lufthansa, Thai Airways, India’s Jet Airways and Kingfisher, and airlines in Taiwan are increasing fuel surcharges on passengers, and U.S. carriers are expected to follow suit. Increases apply to both domestic and international routes and are due to higher costs and low revenue because of the reduced demand for air travel.

Lufthansa raised its charge on domestic German and European flights to $34 a flight leg, but left trip to USA at $116 and claim the increase is due to crude oil prices increasing by up to 43% this year after dropping from record highs last July.

U.S. airlines haven’t followed their international competitors in raising surcharges on domestic routes, though they have on most international routes. The increase in fuel costs comes as air travel has slowed dramatically in recent months amid the global recession. Deep cuts in the number of seats the airlines are making available haven’t offset the slowdown.

In November, U.S. carriers eliminated or significantly lowered fuel surcharges for thousands of domestic fares and included the surcharge in the fare, effectively keeping prices unchanged.

John Armbrust, publisher of World Jet Fuel Report, says foreign carriers have been more proactive about managing risk associated with fuel prices. Airlines are also “trying to get ahead of the game” in anticipation of oil prices rising once the global economy rebounds.

U.S. carriers are more reluctant to bring back surcharges, preferring higher base fares and not separate surcharges.

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