MONTREAL - Air Canada (TSX:AC.B) and Air Transat (TSX:TRZ.B) will likely reduce or eliminate fuel surcharges on international routes because of the dramatic drop in fuel prices, an airline analyst said Friday.
"Fuel surcharges are going to come off and prices will probably go back to where they were when oil started going up again last year," Jacques Kavafian of Research Capital Corp. said in an interview.
The crude oil price has fallen steeply from a record level of $147 a barrel in July to around US$74 on Friday.
That has driven jet fuel prices to the lowest level since last September. They have dropped nearly 25 per cent in the past month, but remain more than 2.5 times higher than in 2000, according to the International Air Transport Association.
Lower fuel costs enable airlines to absorb some softening in traffic resulting from an economic slowdown, added Kavafian.
Air Canada and rival WestJet Airlines Ltd. (TSX:WJA) already eliminated fuel surcharges for travel within Canada and into the United States.
International carriers in Britain and the United States lowered international fuel surcharges this week.
British Airways and Virgin Atlantic this week reduced surcharges on economy and premium economy fares for long-haul flights, but left additional charges on business class fare unchanged.
In recent weeks, foreign carriers including Air France, KLM, Qantas, Cathay Pacific, American Airlines and United Airlines have announced surcharge reductions.
As of Friday morning, Air Canada had a $320 fuel surcharge on a $338 return fare between Montreal and London's Heathrow airport. With taxes, fees and charges, the flight totalled more than $818.
A return flight from Vancouver to Sydney, Australia, included a $450 surcharge, raising the total fare to $1,660.
Air Canada and Transat officials couldn't be reached to immediate comment.
On the TSX, Air Canada shares gained five cents at $4.39 in midday trading. Transat lost five cents to $13.65, and WestJet was up 65 cents to $10.96.
http://travel.canoe.ca/Travel/News/2008/10/17/7122401-cp.html
Topic: Analyst expects Canadian airlines to slash international fuel surcharges (Read 2620 times)