Oil price rise affects cargo fares

The increased cost of crude oil has prompted US air carriers to introduce fuel surcharges on cargo rates from February.

It is not clear whether the airlines will also increase passenger fares.

Most US airlines adopted a 3 per cent increase in business passenger fares within the US last month. But an earlier attempt to increase passenger fares was rescinded when the market failed to accept the rise, suggesting demand may not be strong enough to accept a wider increase.

American Airlines Cargo, Trans World Airlines, Federal Express and United Airlines all announced cargo rate surcharges last week. Northwest Airlines said in the week before Christmas that it would impose surcharges.

Outside the US, SAS, Lufthansa, Air France, KLM and Alitalia have introduced fuel surcharges.

"The cost of crude oil has almost doubled over the past year with no relief in sight," said Mr Mark Najarian, AA Cargo's vice-president of sales and marketing, announcing a 10 cent per kilo charge across the North Atlantic and on routes from the US to Latin America. Other surcharges will vary according to the market.

The US Federal Reserve is monitoring the effect of increased crude oil prices on a range of goods and services, including air fares and freight costs.