PIA has no plan to cut surcharge despite declining fuel prices
By Baqir Sajjad Syed
ISLAMABAD, Feb 13: Pakistan International Airlines (PIA) collected Rs1.4 billion under the head of fuel surcharge from passengers during 2006, but has no plans to cut the levy despite a decline in jet fuel prices, officials told Dawn on Tuesday.
PIA has been charging every passenger Rs1200 and Rs2100 per one-way trip on short-haul and long-haul flights, respectively, since 2006 to ‘partially’ offset the effects of increase in fuel prices. The surcharge amounts to 10 per cent of the fare.
“Collections from the fuel surcharge have given only partial relief from the cost increase as a result of the high price of jet fuel,” said a PIA official.
The national flag carrier claims to have suffered a loss of Rs9.2 billion in 2006, mainly due to the fuel price hike in the international market.
The airline management is, however, reluctant to disclose the exact impact of increase in fuel prices on the bottom line. The only known fact is that PIA’s fuel bill for 2006 was Rs33.3 billion.
Most of the international carriers had announced cuts in fuel surcharge, as the price of jet fuel had been receding steadily since last July to 2005 levels. British Airways set the precedent and was followed by several other airlines like Qantas and Cathay Pacific Airways.
Some other airlines like Singapore Airlines had reduced fuel surcharge for the second time in past few months.
Crude oil had fallen to $56.80 per barrel after peaking at $78.40 last July.
However, most of the budget airlines had been shying away from deciding on cutting the surcharge much like PIA.
The government and PIA management were in the process of establishing Rs5 billion Fuel Equalisation Fund to protect the airlines from fuel price shocks. The fund would be administered by the State Bank.
The airline also intended to start fuel hedging on a limited scale.
