Carry on: Virgin drops fuel surcharge, Qantas sees growth in US, UK, Emirates wants updated A380

Virgin Australia drops fuel surcharge on US flights
Virgin Australia has removed its only international fuel surcharge – on routes to the US – in a sign long-haul air fares are starting to come down in respond to the dramatic fall in the price of oil.

Virgin says in future fares will incorporate fuel costs in the base fare and will also be reducing the base price by $A50 for a transpacific flight in business and $A40 for premium economy and economy. The cuts are based on anticipation that fuel costs will continue to remain at low levels. Virgin previously charged $A680 for fuel on a return flight between Australia and Los Angeles.

"These reductions reflect the benefits of the decline in global oil prices along with the negative impact of the depreciating Australian dollar," it says.

Fuel surcharges are a bane for travellers and agents as most airline won’t allow frequent flier points to pay them and they have no commission. The Australian Competition and Consumer Commission is investigating surcharges in .an attempt to determine whether the airlines have engaged in deceptive and misleading conduct.

Qantas sees big potential in traditional markets
Qantas is talking up the future potential of traditional markets in North America and the UK, two areas that are also important to New Zealand. Though inbound tourism from the US is booming for New Zealand, the UK market is lagging.

Qantas chief executive Alan Joyce, in an interview for PwC’s annual CEO survey released at the World Economic Forum in Davos, Switzerland, says these markets will provide the greatest growth for Qantas over the next three to five years. He says the Chinese market has huge opportunities but so far it’s still a market with low yield and high volume.

“The United States is a huge market for Qantas. We’ve added extra capacity: about 100 frequencies over the peak period, because we see good strength coming out of the US market. We still have a big operation into London and we see the UK market also as an area of potential growth going forward.”

He says Qantas is expected to hit profit of $A300-350 million in the second half of the 2014 calendar year. The strong turnaround is due to rapid progress in a $A2 billion restructuring programme in which all targets have been either met or exceeded.

Emirates backs A380 with call for new version
Emirates says it has told Airbus Group it will commit to buying 100 more double-decker A380s worth more than $US43 billion at list prices if the manufacturer agrees to equip the plane with a new engine. Emirates is the largest operator of A380s, which typically seat 525 people. 

Emirates president Tim Clark has told Bloomberg Television at the Davossummit that the aircraft has “enormous” possibilities in terms of its passenger appeal and potential contribution to profitability. Developing a so-called Neo (new engine option) upgrade, as Airbus has done with  its other jetliners, will help press home those advantages, he says.

“What we’ve said as Emirates is if you’re going to do the Neo, we’re in for 100,” he says. “Put it on the table, we’ll start off for you.”
Airbus’ future commitment to the A380 has been under question as sales have slowed and it has focused on boosting production of the new A350 wide-body aircraft.
Emirates has 57 A380s already in its fleet with 15 more arriving this year out of an order for 140 in total.

Route news of the week
China Airlines is extending the operational period for the Taipei Taoyuan-Sydney-Christchurch service with reservations for the weekly flight throughout March. The overall service to Sydney remains unchanged at four weekly flights. Qatar Airways has increases capacity on its flights from Doha to Italy and Spain. An Airbus A330 will be introduced on the Milan (March 29) and Venice (June 16) routes and the Boeing 787 Dreamliner on the Rome route (from March 29). The Madrid flights using Boeing 777s will be doubled to twice daily from July 16.