Irish airlines rule out fuel surcharges

Irish airlines have ruled out adding surcharges to ticket prices to cover the rising cost of fuel. Aer Lingus also confirmed it had now hedged its entire fuel costs for the remainder of the year.

The airlines' commitment came as British Airways said yesterday that it was raising a fuel surcharge introduced on long-haul tickets in May to £12 () per return journey from £5 previously. UK rival Virgin Atlantic later announced it would follow suit.

Aer Lingus said the "vast majority" of its fuel was already hedged, but it decided in recent weeks to hedge 100 per cent of its requirement. The price it paid has not been disclosed.

At this stage half of its 2005 fuel costs are also hedged, with a small amount hedged in 2006. The airline said the rising prices would have an impact, but it would be limited as much as possible.

"The increase in oil prices is of course having an impact but we have no plans to introduce a fuel surcharge on passenger tickets. We've given a commitment to reduce air fares so we will take any hit on the fuel," said a spokeswoman. Ryanair also pledged not to impose any fuel surcharges. "Our pledge to consumers is clear and unambiguous - the fare you pay is the fare you pay.

Every Ryanair passenger can rest assured that Ryanair guarantees no fuel surcharges - not today, not tomorrow, not ever," said Mr Paul Fitzimmons, the airline's head of communications.

Meanwhile, shares in British Airways fell to fresh nine-month lows as fierce price competition hit fares in the first three months of its financial year and it doubled long-haul ticket surcharges due to soaring oil prices.

Europe's second-biggest airline said its fares yield - the average revenues per passenger carried and kilometre flown - fell 4.5 per cent in the three months to the end of June.

Analysts had expected its yield to rise due to a weak comparative period.

Like most European airlines, British Airways is recovering from last year's market slump due to the Iraq war, sluggish economies and the SARS virus.

But fares have suffered amid an industry price war and fuel costs are eating into earnings.

Virgin competes with British Airways in the long-haul market where fuel makes up 20 per cent of its costs. Analysts expect other airlines will follow the airlines' decision to raise surcharges after benchmark US crude oil prices hit a record high of $44.97 on Friday.

BA shares fell as much as 8 per cent in a volatile session yesterday. They closed 3.5 per cent lower at 204¾p though analysts said the sell-off was overdone.

The airline posted a pre-tax profit of £115 million for the three months to the end of June, up from a £45 million loss in the same period of last year, after it slashed costs and demand for long-haul flights recovered.