LONDON (Reuters) – British Airways is raising its fuel surcharge on long-haul tickets for the fifth time in a year following a surge in oil prices to record highs.
Europe’s third-biggest airline said on Thursday the levy on long-haul tickets sold domestically would rise to 30 pounds per flight on Monday, up from 24 pounds previously.
BA introduced a 2.50 pound fuel levy in May 2004 and first raised it last August to help offset surging oil prices, which touched record highs above $70 pounds per barrel last week.
Other major European airlines are also reviewing their fuel surcharges.
“Our fuel costs remain a real burden. The price of oil hit a record high of just over $70 a barrel in the aftermath of Hurricane Katrina,” BA’s commercial director, Martin George, said in a statement.
Fuel is the airline’s second-biggest cost after labour.
The company’s fuel surcharge on tickets for short-haul European routes, where it faces stiff competition from low-cost airlines Ryanair and easyJet, were unchanged.
Analysts supported the long-haul increase, saying a further such rise was unlikely to deter passengers, with demand still strong for North American and Asian services.
“They’ve clearly reached the limit on yield management on where they can go on short-haul and anticipating a weaker winter period. It is pretty clear they think there is more to go on long-haul,” BNP Paribas analyst Nick van den Brul said.
BA shares were 0.8 percent weaker at 287.91 pence at 0934 GMT (10:34 a.m. British time).
The move follows a decision by Richard Branson’s Virgin Atlantic Airways on Tuesday to raise its fuel surcharges on tickets sold in the country to 30 pounds per flight.
Tourism firm TUI’s German airline Hapagfly said on Wednesday it planned to raise fuel surcharges.
Germany’s Lufthansa traditionally follows BA’s lead. Its air cargo division raised fuel surcharges to 0.50 euros per kilo from 0.45 euros on Monday.
Scandinavia’s SAS said it would raise prices when needed, instead of introducing fuel surcharges, but would review the situation if oil stayed consistently above $60 per barrel.
BA said it was maintaining earlier guidance for annual revenues to come in 5.5 to 6.5 percent higher this year despite higher fuel costs.
The carrier said on Monday current oil prices were too volatile to make predictions about its fuel bill for the year.
By: By Michael Smith
http://today.reuters.co.uk
