As fuel prices in the international market are declining, airlines should review their policy of levying fuel surcharge on passenger tickets, say sources in the tour and travel industry here. Muhammad Qaiser, General Manager of Naba Tour and Travels, the GSA Agent of Indian Airlines, said passengers have complained about the fuel surcharge levied on air tickets. However, he said there is at present an inconsistency in fuel pricing and once it is stabilized in the international market, airlines will act accordingly and possibly remove the extra cost. “Another strong protest coming from passengers, particularly those traveling to India, is the falling exchange rate of the Indian rupee while some airlines are levying a fixed surcharge of SR185 per ticket,” he said. In fact, he said, with the current exchange rate of the Indian rupee versus the Saudi riyal, the surcharge levied on the air ticket should be somewhere around SR140. He said there are airlines that still levy a war risk surcharge of SR22, which was first started after the invasion of Iraq in 2002. Airlines began levying a fuel surcharge after international fuel prices skyrocketed to over $100 a barrel. The fuel surcharge varies between SR185 and SR400 depending on the sector the airline operates. The time has come for airlines to review and revise the fuel surcharge policy “and possibly remove the extra cost passed on to passengers,” the manager of a Gulf-based airline told Saudi Gazette on condition of anonymity. He said, in fact, from time to time his airline has reviewed the airfare including extra tariffs, such as, the fuel surcharge levied on air tickets. “But the problem is the inconsistency of fuel prices in the international market although for some time now the cost per barrel has come down substantially,” he said. He said, however, that airlines have not yet fully recovered despite the lowering of fuel prices in the international market. Despite the austerity measures that several airlines have introduced, with high operating costs, it has been difficult to break even, he said. The ideal price of a barrel of oil should be somewhere around $50 for airlines to make a profit, he said. “It is not only the cost of fuel but other rising prices that keep the operational cost of airlines high,” he said. He said the high cost of fuel depending on the size of the aircraft amounted to between 18 and 25 percent of an airlines' operational cost while the rise in prices of other things such as catering contributed around 45 to 60 percent. However, a cut in the fuel surcharge would mean an air ticket to any destination in Europe would be at least SR400 cheaper, he said. The Saudi-India sector would cost SR300 less “and that would be a great relief to passengers,” he added. An official source at Air India declined to comment on whether the airline would remove the fuel surcharge as the decision must come from its headquarters in India. Similarly, a Jet Airways official said the decision on the fuel surcharge would be taken at the top management level “and once something of the sort is taken, it will be implemented here.” The International Air Transport Association (IATA) has been reduced to an intermediary body and of late it seldom intervenes in airfares or other policy matters, said one industry source. “Since the Billing and Settlement Plan (BSP) was introduced, IATA has been reduced to intervening only when there are disputes between the body's travel agents and airlines,” he said adding that levying taxes or other tariffs are the sole prerogative of the individual airlines. __
