Scoot fires the first salvo to raise air fares due to fuel price hikes

Scoot's Boeing 787 Dreamliner

Sharp rises in fuel prices have prompted major North American airlines to warn of flight cuts and fare hikes, and that direction appears to be rippling into Asia with Singapore Airlines Group’s LCC Scoot firing the salvo to increase airfares by an average of five per cent.

In a statement released yesterday, Scoot said that effective September, its fares will increase by between S$5 (US$3.70) and S$30 per sector, depending on flight duration.

Scoot fares will increase by up to S$30 per sector

Jet fuel price has surged almost 40 per cent year-on-year and now stands at nearly US$90 per barrel on average, according to the LCC.

With fuel comprising 32 per cent of Scoot’s total operating costs, the rise in jet fuel prices has pushed up Scoot’s fuel expenditure by 31 per cent year on year, it said.

Singapore Airlines reported RPK declines across the group in the April-June quarter, as well as a 57 per cent plunge in net profit on the back of rising fuel prices.

Besides increasing fares, Scoot is also looking at containing costs. Some initiatives being considered include exploring ways to reduce fuel burn, review suppliers’ contracts, improve productivity and keep manpower resources lean, among others.

Amid speculation that Scoot’s fare hike may be the start of increases across Asia’s airline sector, travel agents in Singapore are not jumping the gun.

Albatross World Travel & Tours’ president and CEO, Crystal Sim, told TTG Asia: “Any increase in fuel charge has no direct nexus with airline charges. It does not mean ipso facto that airline prices automatically go up… We expect it, but not automatically. In time, it will come.”

Meanwhile in the Philippines, airlines such as Philippine Airlines and budget carrier Cebu Pacific are petitioning to impose a fuel surcharge to cope with rising costs, according to local reports.

The country’s Civil Aviation Board is also in discussion with local carriers on a fare matrix scheme for the fuel surcharges, the Philippines’ GMA News reported.


Sponsored Post