11-Mar-2011 10:38 AM

Qantas warns another fuel surcharge rise looms

Qantas CEO Alan Joyce stated he is confident the airline’s latest fuel surcharge increase will not affect demand and did not rule out further increases as unrest continues in key oil-producing regions in North Africa (The Australian, 11-Mar-2011). The CEO said hedging would ultimately “run out” and airlines would then need to raise airfares to cope with fuel prices. Mr Joyce said he was confident the increase would not affect demand as economic conditions in key markets remain strong and the recent strength in outbound traffic and business demand is also strong. Should oil prices come down, customers are unlikely to benefit from cheaper fares, the CEO said. Mr Joyce also stated there are important differences between the 2008 oil spike and the current spike.

Qantas: "If you look at the numbers - USD88 per barrel in Sep-2011 to USD131 [today] - that's a big movement and a quick one, so it's got to come a long way down before you'd see these fuel charges reversed." Alan Joyce, CEO. Source: The Australian, 11-Mar-2011.

Qantas: "In 2008, it [the oil price spike] was demand driven - the economies were all going very heavy ... and there was huge demand for oil all around the world. And that had a benefit to the airline because obviously in a strong economy, demand-driven environment, demand for the airline's product was extremely high as well. We're in a different position here where a large proportion of this movement is supply driven. It's because of what happened in Libya." Alan Joyce, CEO. Source: The Australian, 11-Mar-2011.

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