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Swissport adds to airline woes by introducing fuel surcharge

  • Swissport to apply 2% fuel surcharge from mid-Jun-08;
  • Swissport to negotiate increase individually with airlines;
  • Expects a " re-thinking" of complete ground handling scenarios (ie outsourcing) as airlines seek to control costs
  • Move could set precedent for other airport services providers, including caterers, MRO providers;
  • Airlines will have little option but to attempt pass on these charges to passengers in the form of higher fares;
  • ACI reports marked slowdown in global passenger traffic in Apr-08;
  • Domestic freight impacted by high fuel prices, making other modes of transport more attractive.

Ferrovial unit, Swissport International has taken the unprecendented step of applying a separate fuel surcharge of up to 2% from mid-Jun-08 in response to the continued steep rises in fuel prices. The handler stated it is obliged to make this increase “despite all internal cost efforts and significant endeavours on all levels”. It added, “most airlines are suffering from higher fuel prices and have passed on some of these costs to their passengers in the form of fuel surcharges added to their fares".

Swissport stated its fleet of thousands of vehicles and energy-generating facilities worldwide have seen their fuel costs rise by up to 50% over the past few months.

The precise details of the new surcharge for the company’s products, services and tariffs that involve fuel/energy depending activities will be determined and implemented locally by Swissport’s various stations around the world. Swissport added, this situation could “possibly lead to a re-thinking and re-evaluation of complete new ground handling scenarios and approaches (ie outsourcing models) in order to help the airlines with their current cost pressure”.

The move could set a precedent for other airport services providers, including caterers, MRO providers and others to introduce their own surcharges. Airlines will have little option but to attempt pass on these charges to passengers in the form of higher fares.

But if more providers follow Swissport's lead, an added ‘airport services’ surcharge on passengers is not beyond the realms of possibility. It all adds to pressure on travel costs, at a time when air travel demand is slowing.

Airports Council International (ACI) this week reported global passenger traffic “slowed markedly” in Apr-08 year-on-year. International traffic, which in previous months buoyed overall traffic results, grew by a modest 2%, and domestic traffic fell by 5.4% compared to Apr-07.

According to ACI, the drop reflects the impact of slowing economic growth and high fuel prices on airline fares and weakening consumer confidence.  The largest domestic market, North America, was down by 13%, as a result of flight cancellations (American Airlines mandatory groundings), ongoing route reduction and carrier consolidation, and the absence of Easter holiday travel (in March in 2008 and in April in 2007).

Freight traffic growth was steady for Apr-08 at +4%, with the strongest growth in international traffic (up by over 5%). Domestic freight grew more modestly at 1%, with the continuing impact of high fuel prices making other modes of transport more attractive. Swissport’s action, which could be swiftly adopted by other handlers, could exacerbate this trend.

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