Airfares may go up to offset soaring oil prices

Monday, 24 January 2011 00:30 - - {{hitsCtrl.values.hits}}

Sydney (Reuters): An industry-wide rise in airfares may be imminent to help offset soaring oil prices that threaten to stall the global aviation sector’s recovery, a report said.

Australian airline Qantas may raise prices and fuel surcharges if global competitors did the same thing, Qantas Chief Executive Alan Joyce said, spelling an end to the rock-bottom airfares experienced during the height of the credit crisis.

“The fuel price has gone up considerably so I think it’s in every airline’s interest to recover these costs,” Joyce said in an interview with Reuters in his Sydney office on Thursday.

“It is a two-edged sword because rising fuel prices are indicative of a rising economy.”

Singapore Airlines signalled an increase in its fuel surcharges on Dec. 2, while other big carriers have said their charges were under review but Joyce’s comments were the clearest signal yet of price hikes may be imminent.

Like other global carriers, Qantas’ long-haul operations are recovering from a prolonged downturn which claimed many of their valuable business and first-class passengers. More recently, Qantas has been dealing with the fallout from a mid-air engine explosion which forced it to ground its fleet of A380 aircraft in the lead up to the busy Christmas holiday period.

Joyce said the airline’s prime objective was reaching a settlement outside of court with Rolls-Royce over the incident, though it has initiated a lawsuit in an Australian court in case a settlement is not possible.