Cathay Pacific has been granted approval by the Civil Aviation Department of Hong Kong to increase its fuel surcharges for a two-month period effective from June 1, 2008 to US$21.90 (HK$171) for short-haul services in South and North East Asia and US$91 (HK$710) for long-haul services.
The current surcharges are US$16 (HK$125) for short-haul services and US$66.4 (HK$518) for long-haul services. Even with the latest increase, the airline estimates that they cover only less than half of the increased cost of fuel.
Cathay Pacific Chief Executive Tony Tyler said, “The approved increases reflect the soaring jet fuel prices that are posing an enormous challenge to the aviation industry. The situation is having a very serious financial impact on airlines worldwide and we are no exception.
“Jet fuel prices have reached an unprecedented level and the situation is likely to get worse before it gets better.
“The price of fuel has doubled since last year and has risen by 55% this year alone. At current prices, it costs us US$360,000 in fuel alone to fly a 747-400 to London and back.”
Mr. Tyler noted that jet fuel prices now account for some 40% of the airline’s net operating costs, compared with 30% last year.
Most importantly, the difference between jet fuel and crude oil prices had widened dramatically in recent months because of additional refinery costs, limited refinery capacity and persistent demand.
Cathay Pacific still lags far behind the surcharges imposed by other international airlines, most of which do not have to seek government approval for their surcharges. Most major airlines currently levy fuel surcharges of some US$120 to US$150 per sector on their long haul services, some even at US$180 level.