JEDDAH, 9 November 2004 — Airlines yesterday warned that if the trend of rising fuel prices persists they will have no other option but to increase the fares. They have already increased the fuel surcharge from $5 to $10 effective Nov. 1. The surcharge amounts to $20 on a roundtrip.
Warnings have been posted by some of the major names in the aviation industry as well as International Air Transport Association (IATA) about the negative impact the “exceptionally high” fuel prices will have on their businesses.
The year ahead presents a totally new scene, with the rising fuel prices. “If fuel prices stay at the exceptionally high levels seen in 2004, we’ll have to consider additional measures to counter the cost overrun,” Hamza Mohammad Sharif, Gulf Air’s general manager for the Kingdom, said yesterday.
The region’s airlines should act collectively toward the introduction and sustained implementation of a suitable fuel surcharge, which would allow airlines to weather the storm, Sharif said.
“Whatever fare increase will be a joint decision of the IATA,” Air-India’s Western Province Manager P. Ashok Kumar told Arab News.
The Gulf Air said that despite high fuel costs the airline was in a good shape due to a strong growth in traffic and revenue during 2004. “While we’re aware of the challenges of the fuel price as we approach 2005, there is much to celebrate at Gulf Air as 2004 draws to a close,” Sharif said.
The Gulf Air’s initiatives in Project Falcon — the airline’s turnaround program that commenced in January 2003 — continue to bear fruit. “As a result we are on a sound financial footing.”
The airline reports record passenger numbers and revenue for 2004. “Like all airlines worldwide, the fuel price is hitting us hard with costs amounting to $93 million over our budget forecast for the year, but it has not diminished our determination and resolve to break even for the year,” he added.
However, with fuel costs presently running at 75 percent over budget and an average fuel budget overrun of more than 42.5 percent for the year, he admitted there was a measure of disappointment that the airline may not have a healthy profit.
The airline will continue to invest in its brand, people, services and equipment and as such the $10 million investment in new first and business seats is on schedule for rollout in February 2005
Sharif announced that Kanoo Travel would officially become its general sales agent in the Western Province from Nov. 11 when the Gulf Air offices move to its new location at Alkhreiji Building near Le Jeddah Meridien Hotel on Madinah Road. “With this, Kanoo becomes our GSA for the entire Kingdom,” he added.
Gulf Air will open more offices across the Kingdom. It will have offices in seven cities in the Western Province, including Makkah, Madinah, Yanbu, Taif, Abha and Tabuk, aside from Jeddah. It will have four offices in Riyadh and five in the Eastern Province — Alkhobar, Dammam, Qatif, Jubail and Hofuf.
