Airline Code [ALK]
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SriLankan Airlines has introduced a fuel surcharge on all airline fares, effective immediately.
The decision to increase fares is due to the unprecedented rise in world fuel prices.
Crude oil prices which averaged around USD75 per barrel in 2007 have shot up to USD141 for the first half of 2008, recording an 84% increase.
In January this year, a barrel of crude oil was USD95, and has increased to USD128 as at June 2008 which is an increase of 35%.
The speed at which world oil prices are rising is the biggest challenge for airlines. There is no time to manage the transition.
While any business has to make sure its product reflects the cost of production, SriLankan is not passing on the total increase in the cost to its passengers. It has, like most international airlines introduced a fuel surcharge, effective immediately, but it will recover only 50% of the additional costs incurred.
At this juncture of volatility and soaring prices, the most practical way to respond to the sharp increase in cost (fuel consists of 52% of the airline's cost as compared to 27% of the total cost last year) is by way of a fuel surcharge based on the distance.
The surcharge differs according to the destination from USD25 to USD80 one-way, on short, medium and long haul sectors.
(c) Centre for Asia Pacific Aviation. Date posted: 9-Jul-08 In-depth analysis of the Indian airline and airport sectors, including latest traffic and financial reports and outlooks, is available each month in the Monthly Essential India. |
SriLankan responds to fuel hikes 
