Kip Powick Posted October 18, 2008 Share Posted October 18, 2008 Ross Marowits THE CANADIAN PRESS MONTREAL – Canadian consumers should only expect a partial reprieve from high international fuel surcharges as competitive pressures force airlines to modestly lower fees despite a dramatic drop in fuel prices, industry experts said today. Air Transat plans to reduce surcharges on some routes and Air Canada is expected to follow suit. The Montreal-based charter carrier will reduce surcharges to several destinations in France, including Lyon, by nearly 17 per cent as of Nov. 1, to $290 from $348 for a return fare. Reductions are also planned for next spring for flights to Germany and the Netherlands. No changes are planned for southern flights, but the cost of packages which represent the bulk of the travel company's business, is lower than last year because of excess capacity, said Jean-Michel Laberge. Air Canada declined to identify planned changes, but said it will alter surcharges and fares as necessary in individual markets. "We will continue to evaluate our pricing and make adjustments to remain competitive in every market we serve," spokesman John Reber said. Air Canada and rival WestJet Airlines Ltd. (TSX: WJA) have already eliminated fuel surcharges for travel within Canada and into the United States. But as of today, Air Canada had a $373 fuel surcharge on a $665 return fare between Montreal and Lyon. With taxes, fees and charges, the flight totalled more than $1,170. Reber said fuel surcharges don't fully cover fuel expenses, which are expected to increase at Air Canada by $800 million this year. The airline is also adjusting by reducing the weight of its planes, flying more efficient models and generating other revenues. Planned capacity cuts scheduled to take place Nov. 1 will proceed as planned as travel demand should be affected by a weakened economy, Reber added. The move is expected to cause the layoff of up to 2,000 employees. Rick Seaney, CEO of FareCompare.com, said Air Canada will only reduce surcharges when forced to by competitive pressures. "As long as the planes stay full, don't expect any fuel surcharges to drop other than minor competitive pressure," he said in an interview. Seaney expects leisure travellers may get a break, but not business travellers. Canadian consumers are clamouring for reduced surcharges, says Bruce Cran, president of the Consumers' Association of Canada. The association receives dozens of phone calls each week on this issue. "They're very unpopular," he said. "They go on very quickly and come off very slowly when there's a change in the oil prices." The crude oil price has fallen steeply from a record level of $147 a barrel in July to around US$74 today. That has driven jet fuel prices to the lowest level since last September. They have dropped nearly 25 per cent in the past month, but remain more than 2.5 times higher than in 2000, according to the International Air Transport Association. British Airways and Virgin Atlantic this week reduced surcharges on economy and premium economy fares for long-haul flights, but left additional charges on business class fare unchanged. In recent weeks, foreign carriers including Air France, KLM, Qantas, Cathay Pacific, American Airlines and United Airlines have announced surcharge reductions. Canadian carriers will be forced to follow suit, said airline analyst Jacques Kavafian of Research Capital Corp. "Fuel surcharges are going to come off and prices will probably go back to where they were when oil started going up again last year," he said in an interview. Link to comment Share on other sites More sharing options...
mo32a Posted October 18, 2008 Share Posted October 18, 2008 Ross Marowits THE CANADIAN PRESS Reber said fuel surcharges don't fully cover fuel expenses, which are expected to increase at Air Canada by $800 million this year. The airline is also adjusting by reducing the weight of its planes, flying more efficient models and generating other revenues. Why should fuel charges cover the fuel expenses? The original ticket should be paying the lions share of that! Link to comment Share on other sites More sharing options...
Seeker Posted October 18, 2008 Share Posted October 18, 2008 Why should fuel charges cover the fuel expenses? The original ticket should be paying the lions share of that! I don't think he was saying that they should cover the whole fuel expense but only that they don't. Link to comment Share on other sites More sharing options...
Guest rattler Posted October 18, 2008 Share Posted October 18, 2008 In theory the cost of the airfare should cover all expenses and include a margin of profit, sadly those days appear to be gone forever. Link to comment Share on other sites More sharing options...
mo32a Posted October 19, 2008 Share Posted October 19, 2008 I don't think he was saying that they should cover the whole fuel expense but only that they don't. I inferred what he stated to mean all the fuel expense, "the fuel surcharge does not fully cover the fuel expense". Maybe misstated - but pretty clear. Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.