BA set to raise fuel surcharge by £10

For the first time in more than two years, British Airways will raise fuel surcharge by £10 on its long distance flights. The airlines will add the extra £10 from Thursday onwards and depending upon the class of travel and distance, total surcharge will vary between £63 and £108.

BA justified the move stating “the substantial recent increase in the price of oil”. However, short haul flights are exempt from the hike.

The last time BA increased the fuel surcharge was in June 2008, which has been reduced twice since then.

Surcharges were introduced to help airlines tide over rising fuel costs and now constitute a major part of total cost. BA said the total hike for a return journey will amount to £20.

In a separate development, the International Air Transport Association (IATA) – an independent industry body, warned on Tuesday that rising fuel costs will be the biggest challenge for airlines in 2011.

Giving out details, IATA said jet fuel prices have soared by 5% in the last one month and by 17.6% over the last twelve months. Oil prices are currently hovering around $90 per barrel from $72 dollars a barrel, recorded in August 2010.

The industry body forecasts the average price to be higher in 2011 to $84 a barrel from this year’s $79 a barrel. The fuel cost will go up to 27% of total operating cost from the present 26%.