Oil price rises hit airline fares

BA plans to keep the price rises under review

British Airways is to raise its fares in the face of soaring oil prices, the carrier has announced.

From Thursday, the airline will add a £5 ($8.80) surcharge to return trip tickets and £2.50 to one-way tickets.

BA's move comes alongside similar announcements from Australia's Qantas and Air New Zealand.

The airlines said they had been forced to make the decision because of a 60% rise in the price of jet fuel over the past year.

Previously, US carriers Continental and American Airlines added a surcharge to their domestic fares.

Under review

Crude oil prices hit 13-year highs of more than $40 a barrel earlier this month.

And on Monday in New York, the benchmark light, sweet crude closed at $40.06 a barrel, its highest close since October 1990.

No company could be expected to absorb those kinds of costs on their own Geoff Dixon, Qantas chief executive Latest oil price data BA share price

BA said the £5/£2.50 fuel surcharge would apply to tickets bought in the UK for international flights.

In markets outside the UK, a surcharge of $4 will be added to BA tickets.

Britain's biggest airline said: "Due to the continuing fluctuations in the price of oil, British Airways will review this surcharge on a regular basis with a view to adjusting it when appropriate."

Qantas said it would add six Australian dollars (£2.30; US$4.20) to the price of domestic flights and A$15 to international tickets.

Air New Zealand is to add 3 New Zealand dollar (£1; US$1.8) to provincial fares, NZ$6 on domestic trunk routes, and NZ$15-20 to long-haul routes.

Second time around

Continuing tensions in the Middle East and increasing oil demand from the US and China were to blame for the recent jump in oil prices, Qantas chief executive Geoff Dixon said.

"No company could be expected to absorb those kinds of costs on their own," said Mr Dixon.

Last week, German airline Lufthansa increased its fuel surcharge for its cargo business.

It is not the first time Qantas has passed fuel price rises - 15% of its costs overall - back to customers.

Qantas used the same strategy in 2000, when jet fuel prices reached $43 a barrel.

The company has found itself under severe competitive pressure in recent years, with low-cost airlines such as Virgin Blue eating into its market.

Oil prices were modestly lower on Tuesday, a day after the world's top exporter, Saudi Arabia, proposed that producers' cartel Opec lift output in an effort to ease prices.

North Sea Brent crude oil traded in London was down 23 cents at $35.74 a barrel.