Air Canada tacks on another fuel charge

www.globeandmail.com Canadian Press

Montreal — Air travellers, already swamped by various extra fees, got more bad news Thursday when Air Canada announced plans to add another $10 fuel charge on each one-way domestic flight.

The move, which takes effect next Tuesday, will bring the fuel surcharge to $25, or $50 for a return trip.

One-way flights under 480 kilometres are exempt from the latest increase, said Air Canada spokeswoman Renee Smith-Valade.

"We're certainly cognizant that there's already a significant negative impact from fees and charges on the short-haul markets."

The latest hike is a temporary measure, Air Canada said.

The airline first introduced the fuel surcharge in 2000 at $15. It was cut in half in November 2001, only to go back to $15 in April 2002.

Air Canada said near-record oil and jet-fuel costs caused by geopolitical uncertainties over a war in Iraq and the strike in Venezuela were to blame for the latest surcharge.

"It's unfortunate that we have no option but to raise the fuel surcharge, although the impact of near record-high fuel prices is something all consumers can relate to," Ms. Smith-Valade said.

The airline says about 45 per cent of its fuel purchases are hedged against market increases in the current first quarter, and about 10 per cent for the three subsequent quarters.

Air Canada estimates that a $1 (U.S.) a barrel increase in the price of crude oil increases the airline's annual fuel costs by $30-million. Fuel is the second-largest expense for an airline, after personnel.

Canada's dominant airline is trying to negotiate cost-cutting measures with its unions after losing $428-million in 2002.