Hong Kong aviation

Flying out of Hong Kong proving to be an expensive business for travellers as airlines impose fuel tax to cover rising cost of oil

  • Airlines can now charge whatever they want after fee was reintroduced on November 1
  • However, some have opted not to do so in attempt to undercut opposition
PUBLISHED : Sunday, 11 November, 2018, 9:04am
UPDATED : Sunday, 11 November, 2018, 11:52pm

Travellers flying out of Hong Kong International Airport are being charged as much as HK$1,624 (US$207) extra by airlines after a fuel surcharge fee was reintroduced on November 1.

A review of ticket prices by the Post has found that almost half of the airlines operating out of the city have added the tariff to the cost of a flight, to cover the rising cost of oil.

The Civil Aviation Department, the industry regulator, announced in late September that airlines would be given free rein to charge whatever they liked on fuel surcharges, without seeking approval from the authorities.

The Post reviewed all 84 passenger airlines flying out of Hong Kong and of those, 36 had added the fee, 36 had not yet done so or opted not to, while the remaining 12 did not provide a breakdown of ticket costs.

Garuda Indonesia’s fee was the highest, with the carrier adding HK$1,624 on top of the ticket only price.

The most common charge was HK$1,304 per return trip. Ten airlines, including Cathay Pacific and Cathay Dragon added the charge for medium and long-haul trips, including on foreign carriers offering one-stop transit flights.

Cathay was among the first to disclose its surcharge, which is HK$652 per flight, resulting in a HK$1,304 charge for a return journey. And travellers opting for a London-Hong Kong-Sydney round trip pay more than HK$2,600.

But, with several major airlines not yet charging the fee, travellers have an opportunity to shop round for a cheaper fare, and industry insiders said some carriers were waiting to see how their competitors reacted.

Among the airlines yet to add a surcharge are major airlines including British Airways, Qatar Airways, Finnair, Qantas, United Airlines, Lufthansa and Singapore Airlines, should fliers want to skirt the fuel surcharge while travelling to popular destinations around the world.

At present, crude oil costs US$72 per barrel, its lowest price since August. The price jumped to US$86 in early October, reflecting the challenges for airlines operating with a volatile fuel price.

Jet fuel is the single largest cost for a carrier, making up to 30 per cent of an airline’s spend. An airline will typically hedge a percentage of its fuel needs years in advance to mitigate extreme price movements.

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Hong Kong has one of the busiest international airports in Asia, flying 73 million people in 2017, with 84 passenger airlines serving 148 destinations.

There are still some airlines not showing the total air ticket price on the first opportunity. However, the aviation regulator has given carriers six months to change things, among them Air China and Japan Airlines have yet to make the change. Similarly, Hong Kong Airlines does not offer a breakdown of taxes and fees collected by the carrier at the first opportunity.

In total, 21 airlines implemented a surcharge for long-haul destinations, and 20 carriers implemented a fee for Asian routes.

With fiercer competition on routes across Asia, airlines who did charge for long-haul routes, did not always charge for short-haul routes. A typical charge ranged between HK$40 by Royal Jordanian, and HK$468 by Japan Airlines. Notably, of the 17 no-frills airlines serving Hong Kong, just three implemented a fuel fee.

The Post has been told a handful of airlines hold private concerns that giving carriers free rein to charge what they want was not a good idea, and would prefer to see any fee capped by the regulator.

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If an airline wants more customers, they can drop the fuel surcharge quickly
Consumer Council chief executive Gilly Wong Fung-han

A CAD spokeswoman, repeating previous public statements on the fuel surcharge, said: “Individual airlines should be allowed to make their own commercial decisions on whether to levy a fuel surcharge. The key is to encourage competition and to ensure transparency in price display to facilitate consumers in making informed choices.”

Consumer Council chief executive Gilly Wong Fung-han said that when an airline set the price for the fuel surcharge, it had to assess different issues such as market position, fuel position, and which markets they were targeting for growth.

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“The beauty of this, is it gives great incentives for consumers when they have a few airlines to compare,” she said. “Some don’t add a fuel surcharge, so it will be very easy to compare, and when the market changes quickly, consumers can grab cheap airfares more easily.

“If an airline wants more customers, they can drop the fuel surcharge quickly. That would offer a lot more opportunity for the industry to compete, and consumers to get more value for money.”