The strength of the longhaul market to Asia will be put to the test as the latest round of fuel surcharge increases kicks in in late-June, when the fee in many cases will be as much as, if not more than, the air fare on major carriers. Effective June 25, a passenger buying, say, a London-Bangkok-London ticket on Thai Airways International pays a US$460 fuel surcharge alone, ie, excluding the air fare and other taxes, compared with US$250 now.
Malaysia Airlines’ (MAS) fuel surcharge on the route is US$340 now; from June 24, it will rise to US$456.
Other major Asian carriers, Singapore Airlines and Cathay Pacific, charge a fuel surcharge of US$190 and US$182 respectively on the route and, at press time, have not announced a new round of increases.
Different airlines have different strategies that determine the fuel surcharge on a route. Factors such as fuel hedging, fleet efficiency and air routings all play a part and, according to UK operators, carriers are starting to be very creative with fuel surcharges.
Virgin Atlantic, for example, applys different increases across different cabins and MAS offers a discounted fuel charge on a throughout route.
The UK, a traditional market for Asia, is a cause for concern, with tour operators interviewed saying, as it is, consumer confidence is low due to a weak economy.
The pound has also weakened considerably against the Thai baht and Malaysian ringgit, while rising fuel costs are also causing ground transfer prices to rise, “be it Bangkok-Hua Hin or Kuala Lumpur-Pangkor”, as Western & Oriental UK group head of product, Mr David Kevan, points out.
Spiralling fuel surcharges may dent travel confidence further and although bookings to Asia remain strong now, these are based on current brochure prices, with fuel at around the US$200 per person level.
Thomas Cook Signature UK regional contract manager - East, Ms Victoria Sertic, said the real impact would only be seen when the new brochures were produced in the next two to three months.
She added: “In the past six months alone, the fuel surcharge has doubled and now an average return fuel surcharge on a straightforward single centre longhaul holiday has broken the US$500 per person mark.
“For destinations such as Bali some airlines are charging as much as US$772 per person. Any savings that we get in the form of tactical offers from our airline partners is completely overshadowed by these huge fuel surcharges.
“Holiday prices are increasing in some instances by £200 (US$392) per person between the editions for the same itinerary, which is down to fuel and currency fluctuations such as strength of the euro against the pound and the US dollar against the pound. ”
Kuoni UK product manager Far East, Ms Tamara Diethelm, said 2008 figures for Asia were looking positive, but these surcharges would eventually affect clients travelling to Asia, coinciding with the credit crunch hitting home in the UK. Her strategy is to work together with the hotels and ground agents to offer clients as much as possible – be it service or upgraded experiences – for the higher prices they are paying.
Ms Sertic expects the family market will take the biggest hit as people stay away from scheduled airlines and go on packaged, charter holidays.
“These (charter) operators seem to be controlling the fuel issue much better.
“They charge nowhere as much as the scheduled airlines by being able to manage both their ground and air stock,” she said.
Shorthaul travel is not expected to gain, as the fuel surcharges hit all routes and these destinations are also seeing a big jump in prices, according to Ms Sertic.
Source : TTG
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