August 2004 issue

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Airlines react to fuel price rise

A number of airlines around the world were raising airfares earlier this year to accommodate the rising cost of fuel, by either adding a surcharge or a percentage increase on fares, and many other carriers were threatening to do so at the time of going to press.

Qantas announced that all tickets would be subject to a surcharge of between AUS$6 (US$4) and AUS$15 (US$10) after claiming fuel costs had risen by 57 per cent in the past year. 'No company can be expected to absorb those kinds of costs on their own,' Geoff Dixon, Qantas' Chief Executive, was reported as saying.

In New Zealand, Air New Zealand followed suit, as the rise in the price of fuel was compounded by the decrease in the value of the New Zealand dollar. Other airlines taking similar measures include Malaysia Airlines, Singapore Airlines, Scandinavian airline SAS, South African Airways, Lufthansa and Cathay Pacific.

A Lufthansa spokesperson said that the airline was following the advice of the International Air Transport Association (Iata). Long-haul prices were to increase by three per cent from July 1, but no further increases were planned.

At SAS, the company announced, 'As a result of the recent extremely high prices for aviation fuel, the SAS Group is adjusting its fares in line with other European and American airlines.'

In the USA, Continental Airlines tried to introduce surcharges of US$10 or US$20 on flights but revised its fees when some other carriers did not follow suit.

Ireland gains new low-cost service

Irish airline EUjet is launching budget flights from Shannon in Ireland to the capital Dublin; Malaga and Murcia (near Alicante) in Spain; and Faro in Portugal in September, joining Ryanair and Aer Lingus - the Irish flag carrier that now operates on a low-cost model - in competing for cost-conscious travellers.

'This is a very exciting development for EUjet,' said PJ McGolrick, Chief Executive of the fledgling airline, which has previously been in the airline leasing business only.

He added, 'The launch of our new service from Shannon will give consumers in the region access to a range of business and leisure destinations at low and competitively priced fares.'

Meanwhile, JetGreen Airways, another Irish low-cost airline, folded earlier this year after only one week of flying. It had been offering services to Malaga and Alicante in Spain, but blamed the competitive sector for the decision to cease trading.

Singapore is new hot spot for low-cost carriers

Australian carrier Qantas is planning to launch its low-cost Singapore-based airline for Asia by November, the company has announced. The joint venture with Singapore businesses and individual businessmen is expected to be called Jetstar, the same name as Qantas' domestic low-cost venture, which took to the skies in Australia in June.

Tiger Airways, a low-cost venture between Singapore Airlines and Ryanair's founder, also plans to begin operations in Singapore by the end of the year.

Meanwhile, Air India has announced its intention of starting up a low-cost carrier in April 2005 to tap into demand for low-cost fares in the Gulf and Southeast Asian markets. 'The aim is to have about 25 per cent lower fares than offered by other international airlines,' said Jitender Bhargava at the airline. Singapore is one of the intended destinations.

Travel Update

Middle Eastern carrier Gulf Air has halved its losses year on year from 2002 to 2003, reporting its best year since 2000. 'Last year was the toughest aviation year ever. Yet we hit out targets and cut our losses by more than 50 per cent,' said Chief Executive, James Hogan. The airline, owned by the governments of Bahrain, Oman and Abu Dhabi, hopes to return to profitability by 2005. It launched a direct service between Dubai and London in June.

Phuket Air, which launched in 2001 by offering two domestic destinations in Thailand, has expanded its services and is now flying to London Gatwick from Bangkok. Flights began in July.

Korean Air, South Korea's biggest carrier, announced it was back in the black for the first quarter of 2004, thanks to increased cargo and passenger traffic and a stronger local currency.

Brazilian low-cost airline Gol! Linhas Aereaes has ordered 15 more aeroplanes; evidence of its rising fortunes as it has posted consistent profits since its launch in 2001.

Low-cost German carrier, Germanwings, is looking for two new bases in the new European Union (EU) member states. 'We are considering establishing a new base in new [EU] Central and Eastern European countries,' said the carrier's Chief Executive, Joachim Klein. 'It would be too early to say where we plan it concretely, but Poland is definitely among the interesting places.' He hinted that a tie-up with local airlines would also be considered.

Passenger traffic for LanChile was up by close to 30 per cent in the month of April, compared with the same month in 2003. Citing increased demand, the airline has announced it is increasing its daily service from Miami to Santiago to 10 flights per week.

Colombia's bankrupt airline, Avianca, has chosen the investor to take a 75 per cent stake in the bankrupt carrier. Brazilian businessman German Efromovich, who owns a regional Brazilian carrier, Ocean Air, has won Avianca's backing over a rival group led by Continental Airlines in partnership with Panama's Copa Airlines. '[This bid] adequately complied with necessary requirements for the company to emerge from Chapter 11 [bankruptcy proceedings] in a satisfactory manner,' said Avianca in a statement.

The USA has finally agreed terms on sharing passenger information with the European Commission, although the European Parliament has threatened to mount a legal challenge. The USA can now access 34 categories of personal information about every passenger travelling to the States. It says it needs such personal data for security reasons.

Qatar Airways and Thai Airways have signed a code-share deal that will link Qatar with the 35 countries served by routes from Thai Airways. 'This agreement continues our strategy to build a network of strategic alliances with the world's other leading airlines,' said Akbar Al Baker at Qatar Airways. 'This agreement effectively links [our] route network of 49 destinations to Thai Airways' network of 72 destinations in four continents.'

Three more airlines have joined the global Star Alliance, further extending the reach of the aviation industry's largest alliance. South African Airways, Finland's Blue1 and TAP-Air Portugal joined in June.

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