Fuel costs up, fares to follow?

The rising cost of fuel is placing pressure on airlines to increase the price of their domestic air fares. Over the past 18 months, the cost of fuel has nearly tripled to approximately $US1 a gallon. Air New Zealand and Qantas New Zealand have already increased domestic airfares by 7 per cent with Australian airlines expected to follow suit. The weak Australian dollar is also contributing to the pressure as jet fuel is priced in US dollars. Virgin Blue’s managing director, Mr Brett Godfrey, claims that tickets are now $4-$5 more expensive due to the rise in fuel prices and admits that it has caused some concern for the airline. Virgin Blue says that it is monitoring the price of fuel and will have to take action if costs continue to rise.

‘Fuel costs biting into cheap fares’, The Australian Financial Review, 25/09/00, p 9.