Sunday, January 13, 2008

Budget airlines respond to record oil prices with surcharge hike

Passengers on Vietnam Airlines’ domestic routes won't pay higher fuel surcharge unless the government approves an increase
Travelers will pay more for air travel after international low-cost carriers decided to pass on record-high fuel costs by raising the ticket surcharge.

AirAsia was the first to raise the surcharge, announcing on January 10 it would rise by US$2.5 on one-way tickets between Hanoi and Bangkok.

The increase takes the ticket surcharge to $99 from $96.5.

Qantas's affiliate Jetstar, which operates direct flights to Ho Chi Minh City (HCMC) from Sydney and Singapore, will increase the international fuel surcharge by $10 on flights booked from January 17.

Alan Joyce, chief executive of Australia-based Jetstar, said the increase was part of the Qantas Group's response to crude oil prices breaking the $100-a-barrel barrier.

“The price of jet fuel makes us suffer from higher costs and we have to raise the surcharge,” said Bui Duc Hanh, AirAsia's chief representative in Vietnam.

Hanh said AirAsia's costs were also affected by the exchange rate between the US dollar and the currencies of the countries the airline operates in.

Hanh said ticket prices hadn't changed since late last year when the Malaysia-based low-cost carrier launched its special price promotion of $0 for online bookings.

Ta Viet Tien, chief representative of Tiger Airways Vietnam, said the country's first international low-cost carrier was yet to release its fuel price policy.

The airline operates two flights a day from Hanoi and HCMC to Singapore, with its aircraft in the air – and consuming fuel – for about 14 to 15 hours a day.

Nguyen Hai, director of TransViet, a local booking agency for 11 international airlines, said none of the traditional full-service carriers had yet announced any increase in ticket prices or fuel surcharges on their flights to Vietnam.

Domestic tickets unchanged Vietnam Airlines spokesman Trinh Ngoc Thanh said national airlines were unable to raise ticket prices or surcharges for domestic flights with-out government permission.

“We just do it with international routes and frequently adjusted surcharges in response to the world's oil fluctuation,” said Thanh, pointing out national airlines were making losses on domestic routes.

Thanh said Vietnam Airlines' domestic flights ran at a loss of about VND300 billion ($18.75 million) a year.

Luong Hoai Nam, general director of Pacific Airlines, Vietnam's only local low-cost domestic carrier, said it had been seeking authority from the government to set its own prices for many years but had so far been unsuccessful.

Reported by Minh Quang