Toronto/CMEDIA: Triggered by an oil crisis reportedly emerging from the war in the Middle East, Air Transat is charging more for flights to Europe as the soaring cost of jet fuel weighs on Canadian and international airlines.
“We have increased fuel surcharges on Europe. However, this is blended in the total price,” said Jean-François Pruneau, chief financial officer at the Montreal-headquartered airline, during the company’s first quarter earnings call on Wednesday.
“What we’re also doing is currently raising fares on peak travel dates and routes where we see less competition, where we have more flexibility,” he told investors.
Fuel surcharges — an extra fee tacked onto airfare to cover unforeseen oil costs — are being added by several international airlines to account for a spike in jet fuel prices since the U.S. and Israel attacked Iran on Feb. 28 that has disrupted the global supply of oil.
Air New Zealand, Australia’s Qantas Airways and Scandinavian Airlines have all announced that they would be hiking passenger fares.
Japan Airlines said it has it evaluates those costs over a two-month period and added it had “no plans” to bring forward fuel surcharge changes before April 1.
Other international airlines, like Lufthansa and Ryanair, have confirmed that they have a hedging system in place to temporarily lock fuel prices in.
The surge in fuel prices has challenged airlines, triggering ticket price hikes and upending global travel. Martin Firestone, travel insurance broker and President of Travel Secure, addresses concerns travellers may be facing.
Pricing adjustments ‘may be needed’: WestJet
Air Transat told investors tickets that have already been sold can be repriced, and said that if the company were to raise fares immediately it would see “a negative impact on demand.”
Air Transat is also looking at other ways to save costs, “including restricting our expenses across the company to make sure that we’re going to be able to deal with that fuel spike,” he said.
The cost of jet fuel tends to be an airline’s biggest expense, and it has soared since the conflict began. According to a price tracker published by the International Air Transport Association, the cost of jet fuel skyrocketed 58.4 percent between Feb. 27 and March 6, from $99.40 US to $157.41 US per barrel.
A spokesperson for WestJet said on Monday that the situation in Iran “has already made operating flights more expensive … based on this, it’s likely further pricing adjustments may be needed.”
Air Canada, meanwhile, is taking hedging positions “for a small portion of our short-term needs,” a spokesperson said.
However, the airline declined to comment on future prices.
