Air Canada adds fuel surcharges to domestic flights
Published Friday, May 9, 2008 9:27PM EDT
Last Updated Friday, May 18, 2012 8:12PM EDT
Air Canada customers will be surprised to find out that they will now have to pay a surcharge of up to $120 on top of their airfare for domestic flights.
The airline quietly incorporated domestic fuel charges on Friday -- for the first time in four years -- in order to cope with rising crude oil prices that have climbed to more than $126 a barrel.
"It will help mitigate the unprecedented and volatile record prices of oil that we're seeing," Air Canada spokesperson Angela Mah told CTV.ca in a phone interview from Vancouver.
The surcharges are in addition to ones already in place for international flights.
The price hikes are:
- $40 for return flights of less than 480 kilometres
- $80 for return flights between 480 and 1,600 kilometers
- $120 for return flights longer than 1,600 kilometers
The domestic fuel surcharges are effective immediately on all flights booked and follow on the heels of surcharges applied to trans-border flights to the United States that were applied on Thursday.
The price hikes were not announced by Air Canada, but the airline's website has been updated so when passengers buy their tickets, they will have clarification as to where the additional surcharges come from.
WestJet Airlines, which is Air Canada's main domestic competitor, has yet to institute a fuel surcharge. But WestJet executives said last week that they were considering a surcharge, though they did not specify an amount.
Analyst Cam Doerksen of Versant Partners believes that other airlines will follow in Air Canada's wake. He says raising fares too much will reduce travel demand, and asks whether these hikes are enough to force changes.
"This is the real test," Doerksen told The Canadian Press in an interview. "Is demand strong enough that the airlines can effectively raise fares by what is a fairly significant amount?"
Brad Davies, director of Vancouver-based Global Travel, believes that the new surcharge will be detrimental to Canadian families.
"The business traveller can pass the charge on to their client or their company," Davies told CTV News. "Whereas for family travel the Canadian dollar finally climbs up to a reasonable level to make travel affordable to Disney Land or Disney World, only they get smacked on the side of the head on a Friday afternoon by fuel surcharges."
On Friday, the world price of crude oil increased to a benchmark US$126.20 per barrel. The cost of jet fuel, a refined crude oil byproduct, is even more than crude, but the concrete price that Air Canada pays is determined by a variety of factors.
"The situation for airlines is compounded by the fact that jet fuel prices have risen even more and as of this week it's up 78 per cent from a year ago," Mah told CTV.ca.
Airlines around the world have been quickly adding surcharges and amenity charges, for things like extra bags and legroom, as they fight to manage elevating energy prices and many now consider fuel to be their principal expense.
With reports from CTV's Rob Brown and The Canadian Press