BA warns on oil-price surcharge

The persistently high price of oil - currently at a 13-year record - may
force airlines to slap a surcharge on tickets, British Airways has warned.
US oil futures flirted with the $40-per-barrel mark last week, and are
predicted to head even higher.

BA said it was "watching developments closely and looking at our options".

The airline added a temporary fuel surcharge last year, which raised
long-haul fares by £10, and short-haul tickets by £5.


Threat to growth

Like all airlines, BA is highly exposed to oil prices, and its shares have
been buffeted recently in consequence.


Fuel accounts for 11% of its costs, and higher prices are likely to raises
operating expenses by £100m this year, the firm said.
The effect on transportation is only one of the many worries economists have
about the current oil market.

As energy costs rise across the board, the burden is almost certain to slow
economic growth and investment, in particular in those economies - notably
Europe and the US - that are dependent on oil imports.

Some analysts are now predicting that US oil prices will hit $50 per barrel,
as the peak summer driving season is about to begin.

Unrest in the Middle East, and perceptions of a terrorist threat to oil
transportation, have stoked fears of disruptions in supply.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/1/h...ss/3698235.stm

Published: 2004/05/09 11:52:37 GMT

© BBC MMIV

The airline added a temporary fuel surcharge last year, which raised
long-haul fares by £10, and short-haul tickets by £5.


According to http://news.bbc.co.uk/1/hi/business/3687629.stm the A380 will
do 95 miles to the gallon per passenger. and with no tax on aviation fuel
can anyone do the maths to tell if 5/10 GBP is reasonable ? and does anyone
know how the 95 miles per pax/gallon compares to 737/747 etc.

In message , Miss L. Toe
writes
The airline added a temporary fuel surcharge last year, which raised
long-haul fares by £10, and short-haul tickets by £5.


According to http://news.bbc.co.uk/1/hi/business/3687629.stm the A380 will
do 95 miles to the gallon per passenger. and with no tax on aviation fuel
can anyone do the maths to tell if 5/10 GBP is reasonable ? and does anyone
know how the 95 miles per pax/gallon compares to 737/747 etc.

Well, a gallon of fuel probably costs a pound (based on US retail prices
for petrol which if converted are exactly ukp1 per US gallon).

A typical long haul flight is 4,000 miles, so 42 gallons per passenger;
or ukp42. (If that's 11% of the total cost it makes a break-even fare
£382, but I digress). Adding ukp10 implies that fuel prices have risen
by 25%. Which using domestic USA petrol prices as the guide, isn't
unreasonable for the last 12 months (up from about $1.45 to $1.80),
although it depends when the current un-surcharged fares were
calculated, and at what fuel price.

http://www.eia.doe.gov/oil_gas/petro...s/wrgp/mogas_h
ome_page.html
--
Roland Perry

"Miss L. Toe" wrote:

According to http://news.bbc.co.uk/1/hi/business/3687629.stm
the A380 will do 95 miles to the gallon per passenger.

That number is pretty well useless as it is. The US Department of
Energy publishes a document called the Transportation Energy Data Book.
It tallies up the amount of energy used by various modes, and the
passenger-miles that are are generated. On average, commercial aircraft
get about 1/2 the passenger-miles per unit of energy as an automobile.

I suspect that the 95 mile per gallon figure is for some small portion
of the flight, like cruise at altitude, and ignores the fuel used in
takeoff, taxiing, and landing, and the typical passenger load factor.
If you use the energy book numbers, they would imply something like 37
miles per US gallon is more typical of a full flight. The A-380 hasn't
made that great an improvement over existing aircraft.

Boeing is claiming their 7E7 will be 25% more efficient than current
aircraft of similar size, which I suppose is mainly the fuel consumption
improvement.

In message , Miss L. Toe
writes
The persistently high price of oil - currently at a 13-year record - may
force airlines to slap a surcharge on tickets, British Airways has warned.

BBC now reporting that the surcharge is $4/£5 depending on the market
where the ticket is sold. (Odd exchange rate, I wonder if they mean
$8/£5)?

http://news.bbc.co.uk/1/hi/business/3702687.stm
--
Roland Perry

"Roland Perry" wrote in message
...
In message , Miss L. Toe
writes
The persistently high price of oil - currently at a 13-year record - may
force airlines to slap a surcharge on tickets, British Airways has
warned.

BBC now reporting that the surcharge is $4/£5 depending on the market
where the ticket is sold. (Odd exchange rate, I wonder if they mean
$8/£5)?

http://news.bbc.co.uk/1/hi/business/3702687.stm


Is this just for new ticket sales, or even if you have already paid - the
article doesnt seem to say.

Image the outcry if MOL puts a 5GBP surcharge on his 99p tickets :-)


Imagine

In message , Miss L. Toe
writes
Is this just for new ticket sales, or even if you have already paid - the
article doesnt seem to say.

No it doesn't, nor do the TV news reports.

The Press Release on their website is equally opaque.

I guess "new sales only" gets it, but only by a small margin. Although
it makes more sense to charge people as they get on board (it's today
the fuel is more expensive, not several months time when that ticket you
buy today gets used). A bit of a PR nightmare though - I know I'd make a
mental note to drink at least one more can of free beer with the loss of
$4 so fresh in my mind...

(The Press release does confirm it's £5/$8, though; which clarifies that
particular part of the BBC's muddled report.)

--
Roland Perry

"Roland Perry" wrote in message
...
In message , Miss L. Toe
writes
Is this just for new ticket sales, or even if you have already paid - the
article doesnt seem to say.

No it doesn't, nor do the TV news reports.

The Press Release on their website is equally opaque.

I guess "new sales only" gets it, but only by a small margin. Although
it makes more sense to charge people as they get on board (it's today
the fuel is more expensive, not several months time when that ticket you
buy today gets used). A bit of a PR nightmare though - I know I'd make a
mental note to drink at least one more can of free beer with the loss of
$4 so fresh in my mind...


But I guess they have bought fuel on the futures markets to protect the
tickets already paid for - so its the forward fuel they are buying now that
is more expensive, which also means that if fuel prices go back down you
won't get a refund because they have already paid the higher prices.

(The Press release does confirm it's £5/$8, though; which clarifies that
particular part of the BBC's muddled report.)


I think we should have an inquiry into the reporting accuracy of the british
press :-)

In message , Miss L. Toe
writes
I think we should have an inquiry into the reporting accuracy of the british
press :-)

Yes, I think the BBC has definitely "sexed up" this particular story...
--
Roland Perry

It is surprising that their fuel efficiency is so rotten that they need
double Qantas.

Roland Perry wrote:

In message , Miss L. Toe
writes

I think we should have an inquiry into the reporting accuracy of the
british
press :-)


Yes, I think the BBC has definitely "sexed up" this particular story...