Air France has become the latest airline to levy a fuel surcharge on its passengers, adding an extra €3 ($3.60) for each leg of a journey since 19 May, and will continue to do so until the price of a barrel of Brent crude oil has remained at $30 or less for 30 days.

Air France hopes that the charge will offset rising fuel costs and allow the airline to reach its objective of cutting €200 million in costs in the 2004-5 fiscal year, €400 million the following year and €600 million in 2006-7.

Air France is one of many major carriers that have added fuel tariffs this month as crude oil reached record highs of over $41 a barrel. British Airways, Continental Airlines, Delta Air Lines, KLM, Qantas, Singapore Airlines, United Airlines and Virgin Atlantic Airways have all announced fare increases of between $3 and $20. Among the low-cost carriers, Southwest says it is considering a surcharge, but JetBlue and Ryanair have ruled out the possibility. EasyJet, which took heavy losses from higher fuel costs, is now starting to hedge fuel purchasing for the first time.

Jet fuel is now more costly than at any time since the end of the Iraq war, and many carriers, including United, blame fuel costs for their continuing losses. United chief executive Glenn Tilton says: "If not for fuel prices, I'd be able to say we'd be profitable this quarter."

Meanwhile, Air France, despite the effects of the war in Iraq, SARS in Asia and an air traffic controllers' strike in France in 2003 that cost the airline about €60 million, posted a net profit of €93 million for the year to 31 March 2004, although this was 22.5% down on €120 million in 2002-3.

The Air France results announced last week were its last. Next year's results will be those of the new Air France-KLM group, which is aiming for "strong profits" and an operating profit of €250 million, assuming the average price of fuel over the year is under $33 a barrel.


Source: Flight International