April 5, 2011 / 4:40 PM / 8 years ago

British Airways ups longhaul fuel surcharge

LONDON (Reuters) - British Airways announced that it would raise its fuel surcharge on longhaul flights as the high price of oil further squeezes European consumers struggling with rising inflation and wage freezes.

A British Airways passenger jet flies past the full moon as passengers travel on the London Eye February 16, 2011. REUTERS/Toby Melville

BA, which formed the International Airlines Group IAG.L (ICAG.L) (ICAG.MC) when it merged with Spain’s Iberia last year, said it would add 10 pounds to the cost of an economy flight and 20 pounds to a premium ticket.

“As customers will know from the price at the petrol pumps, the cost of fuel has continued to rise significantly over the past three months,” said BA’s Chief Financial Officer Nick Swift in a statement on Tuesday.

“We are very aware of the wider economic pressures on our customers at the moment and we will bear the vast majority of the recent fuel price rise ourselves to keep this increase in surcharge to a minimum.”

Oil prices have risen to fresh highs recently, with Brent crude topping $122 a barrel on Tuesday on political unrest in Libya and other exporting Middle East countries.

Industry body IATA expects global airline profits to halve this year as rising costs, especially the oil price, offset increasing demand.

BA last raised its fuel surcharge two months ago and warned that further ticket rises were likely when IAG announced its results in February.

The announcement of the raised charge came as IAG - Europe’s second biggest airline group by value behind Lufthansa (LHAG.DE) - said a continued growth in first and business class travel boosted its passenger traffic last month.

Traffic, measured in revenue passenger kilometres, rose 8.8 percent versus March 2010, while its passenger load factor — a measure of how well it fills its planes — fell 1.9 percentage points to 75 percent.

However, IAG said its first and business-class travel — the most profitable part of its passenger business — rose 18.1 percent.

The company said around half of the rise in premium traffic was attributed to strike disruption which hit passenger numbers in March 2010 but added that the underlying trend was on the up.

In Spain, the short haul market continued to be highly competitive, said IAG, while long haul volumes from Madrid had not kept pace with capacity rises, although forward bookings for April and May looked more positive.

IAG shares in London, which have fallen a fifth in 2011, were down 1.5 percent at 221 pence by 1642 GMT, valuing the group at around 4 billion pounds.

The Madrid-listed IAG shares were down 0.28 percent to 2.53 euros.

Reporting by Rhys Jones and Rosalba O'Brien; editing by Matt Scuffham and David Cowell

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