The Flying Kangaroo may be bouncing back into the black thanks in part to a global slump in oil prices, but don't expect fuel surcharges to be cut from the cost of Qantas tickets.
The airline says that add-on fuel surcharges account go nowhere near towards covering its multi-billion dollar fuel bill.
"Fuel prices have risen dramatically over the last ten years, it's gone from $40 a barrel to $120 a barrel, so our fuel bill has gone from $2.5 billion to $4.5 billion" Qantas Chief Financial Officer Gareth Evans told Australian Business Traveller in late November, on the sidelines of the delivery of Qantas' new Boeing 737-800 in retro livery.
"While we have from time to time increased the fuel tax across that period, those surcharges don't come close to recouping the fuel price increases that we've seen.".
Oil prices have plummeted some 30% since mid-year, going from around $US107 a barrel in July to a low of $US66 a barrel this week – the lowest per-barrel rate since since May 2010 – and an economist for consulting firm Avitas expects oil prices to continue falling towards the $40-$50 per barrel range.
However, Evans maintained that the recent falls are "too temporary and too short-lived" to see a slash in the surcharge.
"We will need to see a substantial and sustained drop in fuel prices before we consider reducing our fuel surcharges."
Savings by the barrel
Analysts suggest that every dollar-per-barrel fall in oil price lands Qantas a $36 million increase in pre-tax profit.
Qantas' current fuel surcharges add $780 to the cost of a business class return ticket to the US, $890 to the UK and $430 to Asia.
Evans said that lower fuel prices would contribute only "about $20 million" to Qantas pre-tax profit for the July-December 2014 period – an overall number which analysts now expect will exceed $130 million – although it will deliver a larger slice of the profit pie in January-June 2015.
"But if the fuel price stays where it is at the moment then there's a bigger benefit in the second half."
Under current oil pricing, Deutsche Bank suggests Qantas' fuel bill for the first half of next year could call by as much as $470 million.
David Flynn visited Seattle as a guest of Qantas and Boeing.
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