Airlines hit travellers for fuel costs

By STUART DYE

The price of plane tickets is about to rise as travellers are forced to pay for the soaring cost of oil.

It is less than three months since Air New Zealand introduced "fuel surcharges".

Last night the national carrier said it was "extremely reluctant" to raise fares again.

"However, if the fuel prices continue to remain at record levels, we will probably have to increase the surcharge that was implemented in May," said spokesman Mike Tod.

Qantas said yesterday that it would add up to A$22 ($23.67) to the price of a return air ticket. An A$10 surcharge is being added for Qantas Domestic, QantasLink, Jetstar and domestic New Zealand services, and an A$22 surcharge for Qantas International and Australian Airlines.

In May the Australian carrier introduced fuel surcharges of A$6 per return ticket for domestic Australian and New Zealand travel, and $A15 for international travel.

A day later, Air NZ followed suit with $6-a-ticket increases for domestic, $15 for transtasman and Pacific and $20 for long-haul trips to Asia and the US.

Air NZ vice-president public affairs Glen Sowry said the airline had contracts which locked in some oil prices for this year at least. Despite that, it would probably have to increase its surcharges again, he said.

But some people are angry that extra costs are being passed on to the travelling public.

David Russell, chief executive of the Consumers' Institute, said both airlines had made a good profit this year and they should have been able to absorb the extra fuel cost.

It was inevitable that international rises would impact locally, he said, "but one would hope they [the airlines] could hold off and share the good fortune of their profitable position".

The third airline on the transtasman block, Virgin Blue, which operates out of Christchurch as Pacific Blue, is also likely to raise prices.

The airline said it was too early to make a decision, but industry insiders widely predict it will add more charges, as it did in May.


The rises are bad news for travellers and holidaymakers, who have been enjoying the price war among airlines. Statistics New Zealand figures released yesterday showed a record number of New Zealanders took trips overseas last month.

Flight Centre managing director Graeme Moore said passengers were still getting good deals, but the airlines were guilty of misleading passengers about the true cost of fares by not advertising the surcharge.

"I guess they are hoping it is an aberration and they will be able to drop the surcharge if and when the fuel price comes back down."

Qantas will begin charging the additional fee on tickets issued and travel begun on or after Thursday.

Chief executive Geoff Dixon said crude oil prices had continued to rise since the initial surcharge in May.

"At that time, jet fuel was about US$44 [$64.30] a barrel - the highest it had been for 14 years. It is now more than US$54 [$80.16] a barrel, almost double its price of US$28 15 months ago."

Fuel accounts for about 20 per cent of Air NZ's operating costs - last year the airline spent about half a billion dollars on fuel.

Airlines around the world, including Singapore Airlines, Air France-KLM, Germany's Lufthansa and British Airways, have recently raised prices to cover fuel costs.