Aer Lingus is to impose a €35 surcharge on all its long-haul routes in response to rising global oil prices which last night reached a new peak of $75 (€60.77) a barrel. Emmet Oliver reports.
The airline's chief executive, Dermot Mannion, said last night the cost of fuel had increased 86 per cent since the start of 2005. He said while fuel was rising, average fares were also falling.
Routes to New York, Boston, Los Angeles, Chicago and Dubai will all be affected and the surcharges come in on May 15th. The surcharge of €35 (or $43) applies to each trip and is doubled for a return ticket.
Based on the average fare in 2005, the surcharge represents an almost 15 per cent additional cost for each ticket. The airline said there was no plan to apply a surcharge to any short-haul routes.
Aer Lingus derives approximately 40 per cent of its turnover from long-haul routes, and recently launched its first non-US long-haul route to Dubai in the United Arab Emirates. Despite the latest surcharge, analysts do not believe the climbing oil prices will stop the sale of the airline (possibly in June, but more likely to be in September).
Stephen Furlong, aviation analyst with Davy Stockbrokers, said he did not believe the sale would be halted, although he agreed that oil prices were likely to put pressure on airline finances. He added there was very little chance of Aer Lingus applying such a charge on routes to Europe and the UK because of the competitive environment.
Ryanair, which only flies within Europe, has ruled out applying any surcharges. Last night, it accused Aer Lingus of ripping-off customers. "There is no justification for adding €42 million in extra fuel surcharges on these long-haul passengers," it said.
Airlines have been under significant pressure for the last few weeks, since oil prices started escalating. Among the airlines which have added fuel surcharges are British Airways, KLM, Iberia, Qantas and American Airlines.
The position of the US carriers will now be crucial to Aer Lingus and its position on the trans-Atlantic market.
So far, competitors like Continental (which flies Dublin-Newark) and Delta (which flies Dublin-JFK) have not imposed a surcharge, but this may change in the coming days. Most of the US carriers have added surcharges to their domestic routes.
Meanwhile, oil rose to a new peak of $75 a barrel last night as investment funds snapped up crude futures and tension mounted over Iran's nuclear intentions.
US light oil for June delivery was up $1.31 at $75 a barrel, while London Brent was up $1.16 to $74.34.
Despite the increases, high prices have yet to halt oil demand growth in the US or in fast-growing China. (Additional reporting by Reuters)