Airline fuel surcharges tipped for comeback

Air New Zealand won’t say whether it is considering reintroducing fuel surcharges in the wake of rising oil prices.

The Centre for Aviation, an Australian-based research company, said it was only a matter of time before more airlines imposed surcharges – unless the price of jet fuel fell back.

‘‘The question for the moment is who’ll bite the bullet first? And will it be the more price-sensitive, low-cost carrier sector, or full service airlines?’’

Taiwan’s Civil Aeronautics Administration allowed local airlines to raise their existing fuel surcharges this week, after oil prices rose above a trigger level.

Air New Zealand would not comment beyond saying that

70 per cent of its fuel purchases were hedged until the end of June, and about 50 per cent for the remainder of the year.

That means it is partially cushioned from the price rises that have seen refineries push up the price of jet fuel by almost

50 per cent over the past year to above US$700 (NZ$1000) per metric tonne.

A back-of-the-envelope calculation suggests short-haul domestic Airbus flights would require about $15 of fuel per passenger, and long-haul flights on a Dreamliner to the US or Asia about $200 of fuel per passenger, with the exact costs depending on a range of factors, including loading.

The Commerce Commission took Air New Zealand to court in 2005 over breaches of the Fair Trading Act after the airline applied fuel surcharges and did not include them in its headline pricing. A commission spokeswoman said that as well as including them in their headline pricing, companies needed to ‘‘properly reflect the rationale for’’ any surcharge.

A financial analyst said some airlines might decide they were better off simply raising prices, without attributing that to a surcharge, but it could depend on factors such as whether they could exclude surcharges from being paid for with Airpoints.