Airlines in Japan ponder lower fuel surcharges to rejuvenate demand as oil prices soften – 18/09/08
Published: 18/09/08
Source: Travel Journal International (TJI) Online*
By Martin Moodie
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What goes up must come down... and then go up again? The volatility of oil prices is proving a nightmare for airlines
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JAPAN. Travel Journal International (TJI) Online* reported this week that several carriers, including US-based Delta Airlines, are poised to lower fuel surcharges – and therefore ticket prices – in response to the softening cost of oil.
In one of the few bits of good news to hit the global economy and aviation sectors in recent weeks, oil prices have fallen rapidly from an all-time high of US$147 a barrel on 11 July to around US$91 earlier this week (however yesterday US light crude for October delivery shot up US$6.01 a barrel to US$97.16 – the second largest one-day surge on record – amid turmoil on Wall Street].
TJI said that airlines operating in Japan plan to lower fuel surcharges from October, “the first turnaround in many months”.
Delta Airlines will ease its surcharges on the Pacific routes departing from Japanese airports by -28.6% to ¥20,000 (US$191) on a one-way basis from the current ¥28,000 (US$268).
That decision came in the wake of an earlier resolution to increase normal airfares on the North America and Hawaii routes by +10% from October at the International Air Transport Association's (IATA) Extraordinary Tariffs Coordination Conference held on 6 August – bad news for Hawaii’s soft inbound Japanese tourism market.
Delta's lower surcharge is expected to apply not only on the Narita/Atlanta route but also on its Latin America routes via Atlanta and code-share flights operated by other airlines, TJI said. This will widen the gap between the US carrier and Japan-based airlines which are applying a ¥33,000 (US$316) surcharge one-way on North America routes – a significant deterrent to long haul travel.
Another foreign long haul carrier, Air New Zealand, decided to hold its current fuel surcharge level in the July-September period at ¥24,000 (US$230) per segment on the Japan/New Zealand route for tickets to be issued between October and year-end. This approach was to avoid a further slump in travel demand.
About half of the foreign airlines operating at Japanese airports had filed for approval of fuel surcharge increases for October and beyond, TJI said.
But a combination of the recent oil price softening – albeit subject to volatile movements – allied to a slump in passenger demand has prompted many carriers to rethink their approach.
Effective 10 September Singapore Airlines lowered its fuel surcharge on the Japan/Singapore routes to US$100 on a one-way basis from the current US$110 (for air tickets up to the end of March 2009) while leaving the US$100 fuel surcharge on the Narita/Los Angeles route unchanged.
*Editor’s note: For the full report please visit
https://tji.tjnet.co.jp. The Moodie Report works closely with TJI Online, the pre-eminent provider of information on the Japanese travel industry. Week in, week out, it provides timely and sharp analysis of the all-important Japanese travel market – international and domestic. It comes with our highest recommendation.
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MORE STORIES ON FUEL SURCHARGES IN JAPAN
South Korea benefits as rising fuel surcharges affect Japanese long-haul passenger traffic – 10/09/08
Japanese overseas travel falls in first seven months as impact of fuel surcharges hits outbound tourism – 03/09/08
All Nippon to raise surcharges in final quarter; double-digit jump for most international routes – 20/08/08
Counting the (falling) price of oil: boost for travel retail as crude hits US$114 a barrel – 18/08/08
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