Airlines pressed to cut charges

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Airlines are coming under increasing pressure to pass on the cost of recent reductions in the price of fuel to their passengers.

Louise Ellman, chairman of the Commons Transport Select Committee, told BBC Radio 4's PM programme that prices should now fall.

BA and Virgin first introduced £5 fuel surcharges on return flights in May 2004 when oil cost $36.50 per barrel.

They have reduced charges for return flights in recent weeks by up to £26.

But Ms Ellman said there should be a further decrease.

If the air fuel surcharge was legitimately about increased costs we would expect it to come down as those costs decrease Louise Ellman MP

"If the charge goes up because of fuel cost increases, it should come down when those costs come down themselves," she said.

"If the air fuel surcharge was legitimately about increased costs we would expect it to come down as those costs decrease.

"I suspect this is a way that the airlines are increasing their fares but are trying to hide that by pretending it is to do with fuel increases."

The price of oil climbed to nearly $150 per barrel this summer but is currently trading at less than $50.

Since May 2004, fuel surcharges have increased by more than 5,000% - it is now possible to pay £266 in such charges for certain return flights with each airline.

The Air Transport Users Council said such costs were part of the ordinary business of operating an airline and should be included in the basic ticket price.

James Freemantle, from ATUC, told the programme: "We think fares should be all-inclusive. Passengers don't need to know what goes into making up that price."

In recent weeks, BA and Virgin have reduced their fuel surcharges by up to £26 for a return flight.

Rival airline BMI has got rid of them completely on UK and European routes but has so far kept the surcharges on its BMI Regional subsidiary.

'Part of the cost'

Virgin said its actual fuel cost per passenger was much higher than the fuel surcharge, a point reiterated by BA which said the surcharge only covers a fraction of the total fuel cost faced by the airline.

Some aviation experts support the airlines' stance

"If a key part of my cost suddenly goes up by 50%, I've got to recover that otherwise we'll get to the situation where more airlines will go out of business," said Laurie Price, director of aviation strategy at consultants Mott MacDonald.

"We've already lost 31 this year - is that what we want? I don't think so."

A spokesman for the Department of Transport said that as and when airlines begin to pay less for their fuel, they would be expected to pass those savings on to consumers.

But fuel surcharges were ultimately a commercial decision for the airlines, he added.