Fuel surcharge fever hits airline industry

FUEL SURCHARGE fever has hit a number of cargo carriers as the impact of the charging oil price filters through to the fuel index put out by the various airlines. Each index is based on the average price of aviation fuel in key spot markets. These are then monitored against a fixed US dollar price per gallon to determine the base index. The price will move up or down depending on the index which is reliant on the key spot markets, which in turn are dependent on the oil price which is priced in US dollars. The British Airways World Cargo fuel index, for example, is based on the average price of aviation fuel in four key spot markets: North West Europe, Singapore, Los Angeles and US Gulf. These averages are monitored against a fixed base of USD 0.513 per US gallon, equal to index 100, and from this a weekly fuel price index is published. Fuel surcharges are determined when the index reaches specific trigger points for two consecutive weeks. The rising price of oil globally has seen a number of surcharge increases in recent months, and these vary from airline to airline. A survey by FTW revealed that the majority of the airlines’ surcharges were pegged at US 70c/kg. SAA and Lufthansa are however imposing the heftiest rate of US$0.99/kg and US$1.02/kg respectively, with the latter expected to further increase its rate to US$1.16/kg from November 26. Lufthansa staff in South Africa told FTW they were merely acting on information from their internationally-based head office. Despite repeated efforts for comment from SAA on the reasons for its higher tariff, none was forthcoming when this issue went to press on Monday morning. "We have our own index against which our fuel surcharge is set," a spokesperson for Emirates SkyCargo told FTW.