HB-IWC

KLM today announced an increase of the fuel surcharge for interncontinental and european flights by 1 and 5 Euro respectively with immediate effect. Here is the Dutch press release:



KLM verhoogt brandstoftoeslag

AMSTELVEEN, 22 maart 2007 - In antwoord op de gestegen brandstofprijzen verhoogt KLM haar brandstoftoeslag op in Nederland gekochte KLM-tickets met 1 euro per traject op intra-Europese vluchten en met 5 euro per traject op alle intercontinentale vluchten.

Dit resulteert met ingang van vandaag in een brandstoftoeslag van 22 euro per traject op vluchten binnen Europa en van 55 euro per traject op intercontinentale vluchten.



I feel that sooner or later the EU is going to have to step in here. There seems to be no end to these fuel surcharge jokes, and airlines should be forced to include these hidden costs in the ticket price.

HB-IWC

As an interesting aside, Air France also increased fuel surcharges today, albeit by only 4 Euro for longhaul with no increase for short and mediumhaul flights. The leaves AF fuel surcharges still quite a bit below those of KLM:

Longhaul: AF - 48 Euro vs KL - 55 Euro
Europe: AF - 12 Euro vs KL - 22 Euro

Any reason why these numbers are not equal for both companies?

One thing is sure... Working in an airline myself, I can assure you that fuel surcharges are good business for the airline.

RWTH

They certainly are, especially because so far they did not result in lower demand and basically all European carriers can afford to play with the surcharges whereas the poor American legacy carriers used to have problems increasing fares, because one or two refused to do so...

HB-IWC

On the very same day that KLM announced an increase if fuel surcharges, a number of its Asian competitors seem to be going the other way:


Cathay Pacific Airways Ltd, Hong Kong's largest airline, cut its ticket surcharges for the third time in a row to reflect lower jet fuel prices. The airline's short-haul levies would fall to HK$102 (US$13) each way from HK$106, while long-haul surcharges would drop to HK$420 from HK$438 beginning April 1, Hong Kong's Civil Aviation Department said on its website yesterday. The carrier's Hong Kong Dragon Airlines Ltd unit will also cut surcharges to HK$102 from HK$106. Cathay, which reassess its surcharges every other month, Japan Airlines Co (Asia's largest carrier by sales), and other carriers are cutting their levies as fuel prices fall. The Hong Kong-based airline raised its surcharges twice in 2006 as jet fuel prices reached record highs.

Source: Bloomberg

jetfan

I assume (and also reading the Dutch text) you mean the other way around:
Intercontinental EUR 5 and European EUR 1.

johan rebel

From May 3rd. Shorthaul € 1 , longhaul € 5.

Johan

Markie

BA has done the same - have a look at the BA board.

NilsHolgerson

Yup; they're just another marketing tool.

Same fare class, same carrier, etc., but the fuel surcharge from the U.S. to AMS is higher than that same flight plus a connection to Germany. It's fake!

sjefenole

Worst on award tickets. Got a r/t to SVO on Aeroflot, and they decided to put 160 dollars of "taxes" on it.
Last time I paid tot go to SVO with SU I paid about 15 dollars in taxes.

johan rebel

From tomorrow, by € 5.00 and € 1.00 for longhaul and shorthaul flights respectively.

Johan

johan rebel

"Dutch airline KLM, part of the Air France-KLM group, said it will increase its fuel surcharges on passenger tickets to record levels in response to the 'very strong increase' in fuel prices.

KLM said the fuel surcharge will be increased from today by 2 eur per flight on all flights within Europe and 10 eur per flight on all intercontinental flights.

The increase brings the surcharge to 27 eur for flights within Europe and 80 eur per flight on intercontinental flights.

A KLM spokesman told Thomson Financial News the airline's fuel surcharges have never been so high.

KLM said half of the increase is based on an oil price of 85 usd a barrel and will be reversed when the price falls below that level.

The airline added in a statement it will reverse the other half of the increased surcharge when oil prices fall below 80 usd a barrel.

Source Forbes

It is interesting to note that although oil prices have risen to record levels, the US$ has also dropped to a record low against the €. Indeed, in € the oil price is no higher now than it was around the middle of last year.

Johan

likkie_lakkie

I read today that: both KL and AF have said that they will reverse the surcharge by 50% as soon as crude oil price will (structurally) drop below $85/barrel and will reverse by 100% if it drops below $80/barrel. Of course I realise that the word 'structurally' is a bit of tricky one. But...it has happened before that surcharges were lowered so let's hope for the best.

Currently the oilprice is approximately $94 per barrel. Since oil is purchased (and hedged) in dollars, I don't think in this particular example the $/Euro xchng rate is very relevant. Let's just hope that oil prices will drop to more decent prices very very soon (not in the last place of all of us cardrivers )

florin

I think the EUR:USD rate is relevant. If they pay for the fuel in USD and their revenues are in EUR, then the surge in oil prices is offset by the EUR:USD exchange rate. Consider this:
- at some point last year: $80/barrel @ 1.2 euro/$ rate means ~67 euros/barrel.
- now: $94/barrel @ 1.45 euor/$ rate means ~65 euros/barrel.

So they're actually paying less for fuel yet they're increasing the prices.

johan rebel

I may be wrong, but I believe KLM defines this as "30 consecutive days".

Johan

likkie_lakkie

Sorry, I think you are not right, a company needs $'s to buy oil (or like airlines and some large industrial compnies do, they hedge themselves for large amounts of oil), they cannot simply use their cashflow EUR to pay for it.

So in short, AFKL needs to exchange EUR to $'s to buy oil, so the comparison is not right.