Oil price hike hits air travel

Complaining that high oil prices have increased costs for the travel industry, international airlines are considering slapping surcharges on the price of tickets.

    As oil prices soar, airlines resort to ticket surcharges

    American Airlines became one of the first major airlines to announce a price surcharge on the cost of a ticket because of near-record high oil prices last week. American Airlines domestic fliers will find an additional $4 slapped on their round trip tickets.

    Australia's leading carrier Qantas Airways followed suit on Wednesday by announcing a AU$6 ($4.18) surcharge per domestic sector and a AU$15 per international flights surcharge effective from 17 May.

    Oil markets jittery

    The increase in travel prices comes amid fears that Saudi Arabia's suggested oil production increase on Monday may have little effect on an already jittery market.

    Although oil futures slipped to below $39 a barrel after Saudi Arabia urged OPEC members to review their quota policy in an upcoming 3 June meeting, analysts believe speculation is fuelling a market frenzy which is helping to keep oil prices at elevated levels.

    China's strong economic growth and increased demand for crude, low US fuel stocks and the continuing violence in the Middle East have also played key roles in keeping oil prices near the 1990 high, reached after Iraq invaded Kuwait.

    On Tuesday, suspected Iraqi resistance fighters attacked a southern Iraq pipeline, setting off a huge blaze which saw Iraq's daily oil production drop by 25%.


    SOURCE: Aljazeera + Agencies


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