Surcharges

[Sirgezza]

Just read in finance magazine that British Airways have bought 81% of it's fuel requirement (for this financial year) in advance at $45 a barrel. The surcharges (although claimed to be for fuel), are really fare increases.

I guess they need to do this in order to spread the increased cost in fuel over a longer period of time. When the $45 price stops and jumps to current market levels, the increased costs will not be so much of a hit.

[stevem]

You'll find they are in the same situation as Qantas, which have hedged 90% of their fuel at USD$49 a barrel only up until 31st December, after that they back in the market.

[seafox]

most of the airlines usually do this.

After 9/11 the only airline that did that was Southwest, who also were the only airlines in the US making a profit.

I do not know the exact figures as to how much fuel is used per passenger for a 10-16 hour flight but increases of up to $150 on the back end are a little excessive.

The airlines will continue to do this as they have found a way to increase their fares without increasing the base fare of the ticket. I.E. it used to be $800 + Tax($50) and now it is $800 + Tax and Fuel Surcharges($150-$200).

[Hep]

Originally Posted by seafox

I do not know the exact figures as to how much fuel is used per passenger for a 10-16 hour flight but increases of up to $150 on the back end are a little excessive.

I don’t know if this can be done this simple but at least this must give a general idea.

The airbus A340 that SAS use for their intercontinental routes uses 0.039 liters per seat per km. The max range for the aircraft is 12.800 km and it has 261 seats.

0.039 x 261 x 12.800 = 130.291 liters

A barrel of oil on the oil trading place now sells at around $65 and contains 159 liters.

So if the aircraft had to go max range it would need 820 barrels of fuel and the fuel today would cost $53.300.

If the oil prices rises $5 that means an increase of $4.100 on the fuel bill. This is just based on crude oil prices. I’m pretty sure the jetfuel that airlines use cost more than $65 per barrel.


130291 liters is equal to 34,419.24 gallons (US)
130291 liters is equal to 28,660.01 gallons (British)

[Tyfon]

You appear to have your aircraft running on crude oil?

Jet A-1 fuel is, I think, around 1-2 euro/litre depending on country/taxes/duties and bulk purchase discounts.

[Hep]

Originally Posted by Tyfon

You appear to have your aircraft running on crude oil?

Jet A-1 fuel is, I think, around 1-2 euro/litre depending on country/taxes/duties and bulk purchase discounts.

Well I did write this because I am fully aware that aircraft doesn't use crude oil. The above calculation was just to give an idea of the process.

Originally Posted by Hep

I’m pretty sure the jetfuel that airlines use cost more than $65 per barrel.

[steve@thaib]

Ryanair are still not imposing a fuel surcharge, and they never did last year either when all the others seemed to.

Just another way of hiking prices IMO.

[CeeGee]

Maybe I have got this wrong, but oil is priced in US dollars per barrel, the GB pound to dollar ratio has steadly risen over the past nine months.
According to my maths, the price in the UK should have either fallen or remained static.
On the other hand, my grasp of international finance is about the same as noddy's so I have probably missed something obvious.

[LivinLOS]

Oil has gone from low 40's to high 60's..

USD/GBP has not moved anbythinglike that amount.. In fact the dollar has done well since jan 05.. Against my predictions.