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Saturday, August 02, 2008

Northwest Airlines to add $80 fuel surcharge for 2009 flights

MINNEAPOLIS (AP) - Northwest Airlines Corp. confirmed on Thursday that it will add fuel surcharges of up to $80 for many domestic round-trip tickets.

The surcharge will apply to travel to about 7,000 city pairs beginning Jan. 10, Northwest spokeswoman Michelle Aguayo-Shannon said. She said Northwest is matching surcharges added by competitors in those markets. Northwest already has fuel surcharges in other markets, she said.


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Saturday, June 28, 2008

Delta Adds Fuel Fee to Frequent-Flier Tickets

In the latest fee to hit the airline industry, Delta Air Lines said Friday that it planned to begin charging a fuel surcharge of up to $50 for booking frequent-flier tickets under its awards program.

Delta is not the first airline to charge a fee for previously free tickets, but it is specifically attributing the step to the soaring cost of jet fuel.

The new fee takes effect on tickets booked on or after Aug. 15. Delta will charge a $25 fuel surcharge on tickets booked within the United States, and $50 on tickets booked for travel elsewhere, including the Caribbean, the United States Virgin Islands, Latin America and other international destinations.

Jet fuel prices have risen 83.6 percent in the last year, according to the International Air Transport Association, the global industry’s trade group. Airlines have responded with a variety of fees and charges for a range of previously free features, from checking luggage to beverages.

Jeff Robertson, managing director of Delta’s SkyMiles program, said the increase in fuel was "causing considerable financial stress to Delta’s business."

He called the step "a difficult but essential decision in the face of record-high fuel costs."

"We hope this is temporary," Mr. Robertson said, "and should fuel prices subside from current levels, we will re-evaluate this surcharge."

Mr. Robertson also said Delta would introduce a "new, multitiered award program" in the next 60 days but gave no details. Industry analysts have predicted that airlines might increase the number of miles required for a frequent-flier ticket.

Many carriers are grounding planes and eliminating flights in an effort to handle their higher fuel costs, meaning that they have fewer seats. Airlines control their inventories of free seats, and generally do not disclose how many are available on a given flight.

This month, American Airlines began charging $5 to book frequent-flier tickets. Meanwhile, US Airways will charge up to a $50 processing fee for frequent-flier tickets booked on or after Aug. 6.

Northwest Airlines said it would cancel two international routes, and suspend another until spring. Northwest is dropping its flight between Detroit and Düsseldorf, Germany, and another between Hartford and Amsterdam. The airline also is suspending a flight between Minneapolis and Paris until March.

Northwest and Delta announced merger plans in April. The carriers hope to receive federal approval before the end of the year.


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Tuesday, June 24, 2008

Fuel costs could 'devastate' airlines

The skyrocketing price of fuel could "devastate" the airline industry and hurt the economy, according to a report from the Business Travel Coalition released Monday.

Pressured by rising fuel costs, major airlines could collapse as early as this year, the coalition said. The failure of just one airline could disrupt travel for 200,000 to 300,000 daily passengers and cause between 30,000 and 75,000 immediate job losses, said the coalition.

The failure of more than one airline could result in 100,000 job losses, said the report, particularly in such hubs as Atlanta for Delta Air Lines, Chicago for UAL Corp.'s (UAL) United Airlines and Continental Airlines' Houston.

"Already depleted cash reserves are dwindling fast, and unless the fuel crisis lessens, airlines face not the now familiar protracted restructuring in bankruptcy, but outright and immediate extinction," said the report.

Business travel would be disrupted, as would the airborne supply chain for goods like pharmaceuticals, electronics and auto parts.

Rising fuel costs hit airlines hard. Fuel expenses are expected to total $61.2 billion this year, compared to $41.2 billion in 2007, according to the Air Transport Association.

Some major airlines, such as Northwest Airlines, United Airlines, Delta and U.S. Airways, continue to operate despite filing for bankruptcy in the last several years. But the credit crisis would make it harder for a bankrupt airline to keep operating while trying to restructure its business, according to the coalition.

The lack of bankruptcy financing is part of the reason why smaller airlines like Aloha, ATA, Champion, Eos and Skybus recently stopped operating, said the report.

Analysts who cover the industry disagreed that a major carrier would crumble this year, because the airlines still have enough cash to survive into 2009.

"I think it's more likely that any large airline bankruptcies would occur next year," said Philip Baggaley of Standard & Poor's, who has assigned his lowest ratings to U.S. Airways, AirTran Airways and JetBlue Airways. "At least at current fuel prices, most of them have enough liquidity to get through several more quarters. But it could get rather more uncomfortable by 2009. Oil prices are the largest variable."

Robert Mann Jr., an industry consultant, said the airlines have enough cash to ward off collapse for this year, and that capacity cuts should help them survive.

"The cuts in flying are designed to cut cash loss and that's what I hope happens," said Mann.

Raymond Neidl of Calyon Securities agreed that the airlines have enough cash to avoid disaster in the near future, though he expects that the number of carriers will shrink through consolidation.

"Nobody's going into bankruptcy this year," said Neidl. "Airlines die slow, and they always seem to come up with the cash to keep going."

Delta plans to acquire Northwest Airlines, though the merger is yet to be finalized.


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Tuesday, June 10, 2008

Korean Air, Asiana Slide Following Record Jump in Oil

Korean Air Lines Co., South Korea's largest carrier, led declines among Asian airlines after a record jump in crude oil prices boosted the cost of jet fuel.

The carrier dropped 3,000 won, or 5.6 percent, to 51,000 won as of 11:06 a.m. in Seoul trading, the biggest decline in almost three months. Asiana Airlines Inc., South Korea's second- biggest airline, lost 4.7 percent to 5,680 won.

Korean Air and other Asian carriers have raised fares, cut flights or fired workers in a bid to cope with jet-fuel prices that have doubled in a year. The cost of jet fuel, most Asian carriers' biggest expense, has surged in line with the price of crude oil, which jumped 8.4 percent to $138.54 a barrel in New York on June 6.

"Korean carriers are coming up with various measures to counter fuel cost, but that won't be enough to cover rising oil prices," said Yun Hee Do, a Korea Investment and Securities Co. analyst in Seoul. He rates Korean Air and Asiana as "buy."

Korean Air last week said it will begin levying fuel surcharges on domestic routes from July. Asiana is asking employees to take voluntary unpaid leave. Both carriers are scaling back their international services.

Other Asia-Pacific carriers also fell after the June 6 oil price jump, which was the largest ever, one day rise in dollar terms and the biggest as a percentage since June 1996.

Jet Fuel Price

Air New Zealand Ltd., the nation's largest carrier, dropped 4.3 percent to NZ$1.12 at 2:09 p.m. in Wellington trading. The airline on June 6 announced that it planned to raise fares and cut some services.

Japan Airlines Corp. fell 2.5 percent to 237 yen at the 11 a.m. trading break in Tokyo. All Nippon Airways Co. slipped 1 percent to 396 yen. Singapore Airlines Ltd., Asia's most profitable carrier, slid 2.3 percent to S$15.40 as of 11:10 a.m. in the city.

Jet fuel prices climbed 3.8 percent to $162.15 a barrel in Singapore trading on June 6. Spiraling fuel bills may cause global carriers to post combined losses of as much as $6.1 billion this year, according to the International Air Transport Association.

China Airlines, Taiwan's largest carrier, today said it will cancel about 10 percent of flights from June, becoming at least the sixth major Asia-Pacific airline to announce cuts in two weeks. The airline will axe 100 passenger services a month, spokesman Bruce Chen said by phone today.


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Monday, June 09, 2008

China Airlines to cut flights amid fuel price rises

China Airlines, one of Taiwan's leading international carriers, announced Saturday it would be cutting back its monthly flights by ten percent. The move has been brought about by the pressure of rising oil prices.

The airline is to cut around 100 passenger and 50 cargo flights from June. A spokesman for the airlines said the flight reductions would remain in place until oil prices fall to "an acceptable level." The airline said however that its flights to Europe would remain unaffected.

Due to rising fuel costs, China Airlines posted net losses of almost 100 million US dollars for the first quarter of this year. That's greater than the airline's net loss for the whole of 2007.


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Sunday, June 08, 2008

Weed gets airline high on possibility of cheaper fuel

If all goes well, an Air New Zealand 747 jumbo jet will take off from Auckland in September powered by fuel refined from the seed of a fast-growing weed.

The three hour test flight could mark one of the more promising - and more unusual - steps by the airline industry to find cheaper and more environmentally friendly alternatives to fossil fuel.

"We're confident that the test will go well," said David Morgan, Air New Zealand's general manager for airline operations, before leading visitors to a farm here where the weeds are being researched.

If the flight is successful, "it'll be a real milestone not only for Air New Zealand but for aviation".

The secret: oil from poisonous seeds of the jatropha tree, which grows in warm climates. For the past year, scientists here have been perfecting a process to turn the oil into jet fuel. This week, the airline announced plans to use this fuel for 10% of its needs by 2013.

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Friday, June 06, 2008

Air New Zealand raises fares

Air New Zealand, the nation's biggest carrier, will raise fares on domestic and international flights an average 4% and cut some services because of higher jet fuel costs.

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Thursday, June 05, 2008

Fliers in for pain as airlines pack it in

The USA's air-travel map is shrinking fast, dropping scores of routes and flights that airlines simply can't afford anymore in a world of $130-a-barrel oil.

A USA TODAY analysis of fall airline schedules shows the nation's most popular vacation destinations will be among the biggest air-service losers. Many flights to Honolulu, Orlando, Las Vegas and other favorite vacation venues have vanished or will soon because cheap tickets bought by tourists don't cover the cost of getting there.

Travelers who fly among the USA's biggest business airports - such as New York LaGuardia, Chicago O'Hare and Dallas/Fort Worth - will probably see the fewest changes, because there's ample demand and fares are high.

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Wednesday, June 04, 2008

Airlines Forecast to Lose $6.1 Billion in '08

Airlines may report combined losses of $6.1 billion this year, the worst since 2003, as spiraling fuel costs and slowing economies wipe out earnings.

The International Air Transport Association, whose members account for 93 percent of international traffic, cut its forecast for the fourth time in nine months at a meeting in Istanbul yesterday after oil prices rose 42 percent in six months. Airlines had a profit of $5.6 billion in 2007, the first since the 2001 terrorist attacks.

"Just as we start to recover, we face another crisis of potentially even greater dimension," IATA chief executive Giovanni Bisignani said at yesterday's annual meeting. "Skyrocketing oil prices are changing everything."

More than a dozen carriers have collapsed in the past six months. British business-class operator Silverjet is the latest casualty, grounding its planes last week after running out of cash. Long-haul budget carrier Oasis Hong Kong Airlines; Columbus, Ohio based Skybus Airlines; and Frontier Airlines Holdings of Denver also failed in recent weeks.

IATA based its $6.1 billion loss estimate on an oil price of about $135 a barrel, equal to the record level reached May 22. The 230 member group's official forecast is for a loss of $2.3 billion, based on a consensus oil price of $107. The group forecast a $4.5 billion profit as recently as April 1.

"This really reflects the whole state of the industry," said John Strickland, director of aviation specialist JLS Consulting in London. "It shows the way in which the industry can rapidly turn from profit to loss. If you look at some of the other forecasts of oil at $200 a barrel, then I think it's more likely to be worse than IATA's projections."

Airline losses since the Sept. 11, 2001, terrorist attacks have totaled more than $36 billion, led by a $13 billion deficit the year of the attacks. The loss in 2003 was $7.5 billion.

Bisignani said the situation facing the airline industry today is "grim," with oil prices obliterating the benefits of a 19 percent increase in fuel efficiency and an 18 percent fall in non-fuel unit costs since 2001. Traffic growth is likely to slow to 3.9 percent this year, compared with 7.4 percent growth in passenger traffic in 2007, he said.

Mergers won't be sufficient to safeguard earnings unless carriers also cut seating capacity, Steven Udvar-Hazy, chief executive of International Lease Finance, the world's biggest aircraft lessor, said in an interview.

"Either airlines themselves have to reduce capacity or find ways to come together and figure out a better way to handle supply," Udvar-Hazy said. "There's a false premise in the U.S. that consolidation will solve problems."


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Tuesday, June 03, 2008

Big airlines could levy budget charges

Traditional airlines such as British Airways and Australia's Qantas could join their low-cost rivals in charging passengers for baggage check-in and food amid soaring oil prices, a leading industry executive warned today.


Monday, June 02, 2008

Virgin turbulence on fuel

Virgin Blue is set to become a bigger thorn in the side of its 62.7% owner Toll Holdings, with one broker warning the airline is not only losing money, but could need an injection of funds if fuel prices remain at current levels.

UBS's research arm has slashed its forecast for Virgin of $60 million net profit next financial year to a $40 million loss, warning the carrier's capital position could become "strained" if jet fuel prices remain at about $US160 a barrel.

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Thursday, May 29, 2008

Qantas tightens seat belts and cuts capacity by 5% as fuel price continue to fly sky-high

Qantas will slash hundreds of jobs, freeze executive pay, ground aircraft and shut down some routes - and those of its offshoot Jetstar - because of the steep rise in fuel prices.

There will be reduced Jetstar operations at Avalon airport by August and the Melbourne to Uluru and Sydney to Gold Coast routes flown by Qantas would be dropped altogether. In total the moves will cut capacity by 5%.

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Friday, May 23, 2008

Passenger planes on go-slow over fuel

Qantas and Jetstar planes have slowed their flying speed in a bid to beat soaring jet fuel costs.

Jetstar has been flying more slowly since last month to conserve fuel, adding several minutes to flights, News Ltd reported on Friday.

A spokesman for Qantas, which owns Jetstar, confirmed its planes had been using variable speed to cut fuel consumption for the past two years.

A Virgin Blue spokeswoman said while it had not altered cruising speeds it was considering slowing its planes during descent.

Jetstar spokesman Simon Westaway said fuel prices had risen by 68 per cent in the past 12 months.

"The challenge for airlines is that fuel costs are at record levels," he told News Ltd.

"We have been conducting a trial where aircraft flights are taking a bit longer and burning less fuel.

"Early indications are that we are seeing positive savings in terms of fuel."

The practice, already used in the US, is expected to save airlines millions of dollars and reduce the upward pressure on airfares.

Qantas on Thursday announced it would increase its international fares by four per cent and domestic fares by three per cent from June 4 on the back of soaring world oil prices, which also forced petrol prices beyond $1.60 this week.


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Air France feels pinch as oil prices hit home

Air France-KLM said Thursday it expects the coming year to be "challenging" amid sharply higher oil prices and a sluggish global economy which contributed to a net loss in its fourth quarter.

Europe's largest airline said in a statement it lost $853.81 million in the three months ending March 31.

CEO Jean-Cyril Spinetta said the group expected operating profit for the coming fiscal year to fall as skyrocketing fuel costs clouded the outlook for the industry.

Oil prices were setting new records nearly every day, and on Thursday hit a record above $135 a barrel before falling back.

For the full year, Air France-KLM reported a 16 percent drop in net profit to $1.2 billion.

Shares fell 10.2 percent to $26.37 in Paris morning trade. ABN Amro said the full year net profit was "well below" its forecasts.

The airline group booked an exceptional charge in the quarter of $834 million to cover possible penalties arising from an anti-trust probe into airline cargo activities.

Air France-KLM said it had an operating loss -- a measure of earnings from ongoing operations -- of $72.46 million in the quarter. In the full year, operating profit rose 13.3 percent to $2.21 billion.

The Franco-Dutch group said was targeting an operating profit of $1.58 billion in the coming year.

Spinetta said the soaring cost of fuel meant the industry was in for a "profound transformation," predicting capacity reductions, the acceleration of mergers and the exit of some players from the market.

Given its young fleet of fuel-efficient aircraft, a hedging policy which softens the impact of higher oil prices, and synergies from the merger of Air France and KLM, he said the airline group was well-placed to weather the storm.

"We have strong qualities to come out of this reinforced," he said at a Paris news conference.

To compensate for higher oil prices, some airlines raised ticket prices again last week. Air France, which operates separately from its Dutch partner KLM, announced its 17th oil price linked hike, bringing the total fuel surcharge for passengers to $156 for a one way long haul flight.

Airlines paying about 82 percent more for jet fuel than they did a year ago have preferred to cope by raising fares and charging for extra bags and other amenities.

American Airlines on Wednesday announced drastic measures to cope with record high fuel prices including layoffs.

Air France-KLM recently broke off merger talks with struggling Italian airline Alitalia, and CFO Philippe Calavia said the Italian carrier's situation "is much more difficult today than it was two months ago."

Air France-KLM said its yearly fuel bill rose 7.4 percent to $7.2 billion. In the coming fiscal year, Calavia said he expected the fuel bill to rise by an extra $1.89 billion.


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Monday, May 19, 2008

British Airways will ground part of its fleet over rising fuel cost

British Airways plans to ground part of its fleet from October to cut costs and stem potential losses caused by the crippling price of fuel.

Confirmation of the move, from chief executive Willie Walsh, comes as analysts warn BA may only break even or worse for the next two years, despite having reported one of its best year's trading last week.

The sudden reversal has been caused by rapidly rising fuel prices - jet fuel went through the $1,300 a tonne mark last week - and sluggish demand.

BA has already selectively slashed fares across the Atlantic, offering returns to New York for £249, a base fare of £30 once taxes and fuel surcharges are stripped out. "It is a bloodbath," said one industry executive.

Scheduled airlines rarely ground aircraft, preferring to keep their expensive fleets in the air, although Ryanair has kept planes on the ground during slack periods. Walsh said: "You should certainly expect us to do that this winter."

The airline would park its oldest, least fuel-efficient aircraft. Walsh said this would be likely to include its older Boeing 747s, 767s and 737s.

BA last week reported strong annual results for 2007-8, hitting its long-held goal of a 10% profit margin, paying staff £35m in bonuses and the first dividend in seven years.

Walsh did not take his £700,000 bonus, saying it was not appropriate in the wake of the chaotic opening of Heathrow's terminal 5.

The fall-out from the T5 debacle will dent BA's figures this year. The company has guided analysts to expect a hit of a further £40m-£50m on top of the £18m in the last financial year.

Half of the hit would be in extra costs, half in lost revenue. Walsh told analysts that T5 was working smoothly, although the moves of additional flights to the terminal would still be later than first planned.

Fuel will be the biggest headache for BA. If oil continues at $120 a barrel, BA's profits could be wiped out this year. Chris Avery, analyst at JP Morgan, said that if oil remained above $110 a barrel, "investors need to be very conscious that BA could make a loss for one or both of the next two years".

BA is hoping tough times will help it take the lead in industry consolidation. Walsh said that he had resumed negotiations with American Airlines and Continental Airlines of the US with the aim of creating a transatlantic alliance.

Previous attempts have been rebuffed by American regulators, but Walsh said he was hopeful the difficult trading environment would clear the way for a deal. Pilots begin a legal challenge to BA's plans to start an "airline within an airline" tomorrow. The company wants to start flights between Paris and New York next month with a new subsidiary called Open Skies.

The British Airline Pilots Association does not oppose the services, but is against the planned use of flight crews from outside the main BA pilot group.

Pilots voted in favour of striking over the issue earlier this year, but they have put the action on hold pending this week's High Court challenge.

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Ethiopian Airlines says profits may hit record high

Ethiopian Airlines net profits for the first nine months of 2007/08 reached 484 million birr, the airline said in a statement late on Friday.

The state-owned carrier posted net profits of 129 million birr in 2006/07. The statement predicted that, based on the first nine months of 2007/08, the airline would achieve a record net profits and revenues.

Expenses for the same period rose by 21 percent, the brunt of which Chief Executive Girma Wake said was spent on fuel.

"Fuel price remains of concern to the industry as a whole and Ethiopian believes that costs will continue to escalate into the next quarter given the present trend in price of fuel," Wake said.

Revenues for the period rose 29 percent to 6.6 million birr, he said. The airline transported 1.9 million passengers, a 19 percent increase on last year.

Wake said the improvements in revenue and traffic were due to increased frequency of flights, the introduction of new routes and an increase in cargo revenue.


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Thursday, April 24, 2008

Sky-high fuel hurts US airlines

Delta Air Lines and Northwest Airlines have both recorded multi-billion dollar losses for the first three months of 2008, hit by crippling fuel costs.

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Saturday, March 08, 2008

EasyJet fears damage to airlines from rising oil price

The biggest danger facing the airline industry is the global oil price, easyJet warned today, after it released strong passenger numbers.

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Monday, March 03, 2008

BA and Virgin to pay out refunds

People who flew long-haul with British Airways or Virgin Atlantic between 11 August 2004 and 23 March 2006 will be eligible for a refund.

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Monday, December 03, 2007

India's airlines raise fuel surcharge on tickets

India's Jet Airways Ltd Kingfisher Airlines said they were raising fuel surcharge for the seventh time in 12 months by 300 rupees ($7.6) per domestic ticket to offset higher jet fuel prices.

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Tuesday, November 13, 2007

Air France increases fuel surcharge

Air France said on Tuesday it was increasing its fuel surcharge due to the high level of fuel prices.

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Thursday, August 02, 2007

BA's price-fix fine reaches £270m

British Airways has been fined about £270m after it admitted collusion in fixing the prices of fuel surcharges.

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Friday, July 20, 2007

Southwest Airlines hit by labor costs, fuel prices

Southwest Airlines reported a 17 percent drop in second-quarter profit Wednesday and blamed high fuel prices and labor costs for the disappointing results. (page not found)

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Saturday, April 28, 2007

BA increases fuel surcharge

British Airways has raised passenger fuel surcharges on longhaul flights, just four months after reducing the levy.

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Wednesday, January 17, 2007

Qantas reduces fuel surcharge

Qantas passengers will benefit from the 25 per cent drop in jet fuel prices, with the airline announcing today that it would pass on fuel savings to its customers on Australian and New Zealand flights, and some international flights.

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Friday, November 24, 2006

Southwest Airlines boosts one-way fares

Southwest Airlines has raised the price of one-way tickets from $3 to $10 in an effort to offset higher fuel costs. (page not found)

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