Air Malta imposes another fuel surcharge

Air Malta yesterday introduced a second fuel surcharge on its fares, raising them by a further €3, saying the final six months of the last financial year (ending this July) have seen a dramatic increase in its fuel costs.

"The airline anticipates that the cost per barrel will not return within the next few months to the levels available early in the year. Therefore, it is taking immediate steps to follow most of the key players in the industry by announcing a second fuel surcharge on its fares by a further €3 per sector with immediate effect. Contracted tour operators' rates will have this surcharge applied as from April 2005," Air Malta said.

It said spiralling fuel costs were affecting the airline industry worldwide and the recent increases in the prices of fuel, which almost touched $50 per barrel in early August, have continued to impact negatively on the already fragile civil aviation business.

According to estimates by the International Civil Aviation Organisation, the global scheduled airline industry made net losses of $30.9 billion in the past three years. "A weak global economy, 9/11 attacks, the war in Iraq and Sars fuelled these losses. The high oil prices are now further threatening the industry despite the recovery in traffic levels," the airline said.

In July last year Air Malta joined most of the airline industry in adopting an increase in fares with individual business being surcharged as from July and volume tour operator business being surcharged as from November.

"We are operating in a very difficult market environment. Whereas average unit revenues are going down our industry is experiencing spiralling expenses in operating costs", Ernst Funk, Air Malta's chief executive officer, said.

"The industry is already heavily penalised for the fact that it has no mechanism to recover such cost escalations immediately. Air Malta has a rolling fuel hedging mechanism in place which has been largely successful but has not been sufficiently robust to cushion the whole effect of the spiralling costs of this essential commodity," he said.