Japan Airlines has announced that it intends to lower fuel surcharges on tickets issued on or after February 1, 2015.
The Japanese carrier has applied to the Japanese Ministry of Land, Infrastructure, Transport and Tourism (MLIT) for permission to lower its fuel-surcharges in line with new per barrel fuel costs averaging $99.07 a barrel, down from the previous $114.64/barrel.
For passengers flying between Japan and Canada, Europe, Middle East and the US (excluding Hawaii) these newer rates would result in a decrease in fuel surcharges from $259 to $173.00 per ticket. Surcharges to Hawaii, India and Indonesia will drop from $166 to $80.00 per ticket. These lower surcharges on JAL bookings will apply both to flights operated by JAL and to flights operated as a codeshare on JAL’s partners.
Going it Alone?
IAG Group, owners of British Airways, Iberia and Vueling, told Skift they will not be lowering fuel surcharges for the time being, citing economic factors which off-set any benefits from cheaper oil.
“The fuel surcharge has never recovered the rise in our airlines’ fuel costs since the oil price started increasing more than 10 years ago,” said an IAG Spokesperson. “The current decrease in fuel prices does not have an immediate, noticeable impact on our airlines given that we hedge a significant proportion of our fuel. In addition, the US dollar has strengthened recently against the euro and sterling, partly offsetting any savings that the lower prices may provide.”
In its 2015 forecast published yesterday, IATA gave us a trickle of hope of lower fares next year:
“The industry outlook is improving. The global economy continues to recover and the fall in oil prices should strengthen the upturn next year. While we see airlines making $25 billion in 2015, it is important to remember that this is still just a 3.2% net profit margin. The industry story is largely positive, but there are a number of risks in today’s global environment—political unrest, conflicts, and some weak regional economies- among them. And a 3.2% net profit margin does not leave much room for a deterioration in the external environment before profits are hit,” said Tony Tyler, IATA’s Director General and CEO.
“Stronger industry performance is good news for all. It’s a highly competitive industry and consumers—travelers as well as shippers—will see lower costs in 2015 as the impact of lower oil prices kick in. Airline investors will see ROIC move closer to the WACC. And a healthy air transport sector will help governments in their overall objective to stimulate the economic growth needed to put the impact of the global financial crisis behind them at last.”
IATA expects jet fuel prices to average $99.9/barrel in 2015, and indicates that improving airspace and airport efficiencies could result in a 5% reduction in wasted fuel.
JAL has also asked requested authorisation from MLIT to lower the surcharge applied to cargo on medium-haul and short haul routes, based on an a lower price per barrel range of $95-$99.00, starting January 1, 2015.