Published August 16, 2008

Buying an air ticket? Check the fuel surcharge

It can often exceed the actual economy airfare itself

By NISHA RAMCHANDANI
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(SINGAPORE) When making travel plans these days, it would be prudent to check the fuel surcharges and taxes that accompany the ticket price. High oil prices have inflated fuel surcharges to the point where the add-ons for flights to cities such as Bangkok and Tokyo often exceed the actual economy airfare itself.

A check on the Malaysia Airlines website revealed that an economy flight to Bangkok would cost $310 for its super saver fare and $380 for its flex saver fare, while extras such as surcharges and taxes came to $407 each for both categories of fares.

A round-trip economy ticket to Bangkok aboard Thai Airways starts as low as $139, while the accompanying fuel surcharges and taxes total $279 - about twice the ticket price.

A travel agent from Chan Brothers has noticed a similar trend for other flights bound for Tokyo, Taiwan as well as some European countries, on Thai Airways and Malaysia Airlines.

For instance, a super saver ticket to Tokyo on Malaysia Airlines would come to about $480, but surcharges plus taxes would amount to $530.

In some cases, while extras may not exceed the airfares, the surcharges still add up to a hefty sum that is virtually comparable to the ticket price.



Airfare for a Los Angeles ticket aboard Japan Airlines would come to about $1,400 while add-ons are in the region of nearly $1,350. Roundtrip airfare to Kuala Lumpur on Singapore Airlines (SIA) is priced at $230, while taxes plus surcharges come to $171 - nearly three-quarters of the ticket price.

'We don't know what to expect,' said travel agent Ferdous Talib of Jesal Brothers Tours & Travel, pointing out that customers who book tickets today may see huge differences in prices when tickets are issued in the future.

Malaysia Airlines (MAS) executive director and chief financial officer Tengku Azmil Zahruddin said that while the airline does offer competitive fares where total surcharges may exceed airfares, the low fares make it a 'win-win situation for customers'.

Skyrocketing oil prices this year have been putting the squeeze on airlines, hitting the bottom line hard.

SIA's net profit for the April-June quarter fell 15.4 per cent year-on-year to $359 million on the back of higher fuel costs. This was in spite of a 14.1 per cent rise in revenue growth to $4.1 billion.

As such, airlines have been forced to revise fuel surcharges in an effort to manage rising costs.

SIA has raised fuel surcharges three times this year so far, with the most recent increase in June. Since last December, fuel surcharges for flights between Singapore and Asean countries have risen 54 per cent to US$40 per sector (from US$26 previously).

Thai Airways announced a marked increase in fuel surcharges from July 1, while Air Mauritius also announced last week revised fuel surcharges, with an increase of some 15 per cent for economy fares and 20 per cent for business class fares.

Unsurprisingly, the hikes haven't gone down well with customers, some of whom may be adopting a wait-and-see attitude, said Ms Talib.

And while oil prices have been sliding of late, this may not translate to lower fuel surcharges just yet.

'Decisions on fuel surcharge will be based on the movement of the fuel price over a period of time, rather than what could possibly be just a short-term decrease,' said Tengku Zahruddin, who added that fuel surcharges offer airlines only 'partial relief' from the price of jet fuel. MAS has hedged slightly more than 43 per cent of its fuel requirement for this year.