Asian Airlines Begin Raising Surcharges

[george]

Asian airlines begin raising surcharges

BANGKOK: -- Asia-Pacific airlines have begun raising fuel surcharges as crude prices soar towards the $US50 level, threatening profits just as the carriers are rebounding from last year's SARS crisis.

Singapore Airlines and its regional wing SilkAir said they will increase their current fuel surcharge of $US5 to as high as $US12 from September.

For flights to South-East Asian cities, passengers will have to pay a levy of $US7, while the surcharge on all other flights outside of the region will increase to $US12.

Australian flag carrier Qantas Airways Ltd followed suit, citing rising fuel costs, which have been advancing to record highs almost daily.

Chief executive Geoff Dixon said Qantas would next week increase next week its fuel surcharges by $A4 and $A7 respectively for domestic and international services.

The domestic fuel surcharge will rise to $A10 from the $A6 per sector charge introduced in May.

The surcharge on international sectors will rise to $A22 from $A15.

Smaller carriers could suffer even more than the industry giants.

A struggling Thai budget carrier, Air Andaman, is further scaling down its plans after being forced to suspend operations in July due to mounting costs and cut-throat competition.

Its chief executive was quoted as saying in Thailand's Nation newspaper that the carrier had scrapped plans for its Bangkok-Singapore flights.

The Philippine Civil Aeronautics Board, which regulates air fares, said starting in June, it already granted permission to local carriers Philippine Airlines and Cebu Pacific to impose fuel surcharges.

From June to August, it also approved such surcharges for 12 foreign carriers.

Other Asian carriers said they had no immediate plans to further raise charges after imposing increases earlier in the year.

But analysts said this could change after oil prices broke the $US48 a barrel barrier and soared towards $US50.

"Yes, I do see them increasing fuel surcharges," said Chris Sanda, a regional transportation analyst with DBS Vickers Securities.

"Airline pricing is a typical oligopolistic pricing model because generally when you see one raise its fares... others will follow suit," he told AFP.

The advancing oil prices also threaten to dampen airline profits, which are rebounding after last year's turbulence generated by the Severe Acute Respiratory Syndrome (SARS) outbreak.

"Higher fuel prices without prudent hedging and fuel surcharges naturally will impact on the bottom line of airlines," Sanda said.

"While the airline industry is enjoying a cyclical recovery, the higher fuel prices mute earnings growth compared to if fuel prices were not near record levels."

Richard Stirland, director general of the Association of Asia-Pacific Airlines, said Thursday robust load factors should put regional carriers in a strong position to maintain yields, but added surging fuel prices were "an increasing concern."

A spokesman for Malaysia Airlines told AFP there was no immediate plan to further increase the fuel surcharge of $US13.20 imposed in June.

Transport Minister Chan Kong Choy said the oil-exporting nation's flag carrier will absorb the recent price rises, while the government will seek to cut costs by reducing airport parking fees.

Japan Airlines and All Nippon Airways said they had no plans to further raise charges after increasing fares on international flights in July.

Pakistan International had adjusted fuel charges on international flights this week, and there are no plans to adjust domestic fares.

A spokesman for Indonesian flag carrier Garuda Indonesia said "we are still assessing whether or not new fuel surcharge should be imposed on our flights".

Vietnam Airlines said on Monday the government had denied it permission to hike ticket prices.

-- AFP 2004-08-20

[Bonkers]

It had to happen sooner or later, I guess. What are the bets though that they remain in place much like the airport tax fees haven't gone back to Bht300 as promised in '97?

[Jing Joe]

Royal Brunei airlines might well be smiling about this depending on the "connections" between their fuel tanks to the country's oil wells.

[Selina]

On a related subject, what is the best airline to fly from BKK to London Heathrow?

[Ben Dover]

Well I flew Phuket Airlines this month, 23K return to Gatwick, excellent flight and excellent service through out.

Great Food, and drink and sandwiches whenever you wanted them.

Gatwick is OK, the trains into central London are every 15 minutes from right inside the airport.

Ben

[april]

yeah my mate flew from phuket to london return last month with 20,000 bht

phuket airline

[Martin]

Brunei is always reported as 'oil rich', but actually its oil is only a small resource compared to its natural gas. It is the gas that is exported to fuel the power stations around Tokio Bay that is the BIG money earner. I haven't looked at the statistics for a few years, but I think Brunei's earnings from its foreign investments could now well be its biggest earner of all.