Qantas to “absorb fuel surcharges into fares”

Qantas has announced that it will abolish its fuel surcharges, but without reducing overall fares.

The Australian carrier said on Tuesday that it will “gradually restructure its international tariffs so that fuel surcharges are absorbed into base fares”, but that “overall fares will not change as a consequence.”

This means that Qantas’ international fares will increase to cover the loss of the fuel surcharges, but the airline justified this by saying that it has already reduced its fares, compared to when the surcharges were first introduced.

“While global fuel prices have fallen in recent months, international air fares are extremely competitive and are significantly lower than when surcharges were first introduced 10 years ago,” the airline said.

“Given the size of the Qantas International network the process to absorb fuel surcharges into international base fares for up to 200 destinations will take time. As overall fares are not changing, customers will not be disadvantaged.”

“If you look at the trends in global aviation over the past decade, costs and competition have been increasing while fares and airline margins have been falling,” said Qantas CEO, Alan Joyce.

“The dynamics of this market have seen Qantas International post significant losses in the past two years. Even now, yields remain significantly below pre-GFC levels and like the rest of the industry our strategy is to keep strengthening them.

“In a highly competitive environment where customers are already paying less than they were several years ago, lower oil prices can help put the industry on a more sustainable footing. It means airlines are in a better position to invest in the new aircraft, new lounges and new routes that ultimately benefit customers,” he added.

Earlier this week, AirAsia confirmed that it was abolishing fuel surcharges across its entire network, while the Philippine government has also ordered its airlines to remove the charges.