Swiss increases surcharges due to oil shock

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• Swiss and Edelweiss are increasing their fuel surcharges due to the sharp rise in kerosene prices.
• The price of aviation fuel has more than doubled in the space of a month.
• Further price adjustments are possible as the situation continues to develop dynamically.

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The consequences of the war in Iran are now also affecting ticket prices. The airline Swiss and its sister airline Edelweiss are increasing their fuel surcharges.

"Due to the current volatile situation in connection with the effects on the oil price, the 'International Surcharge' has been adjusted accordingly," explained a Swiss spokesperson on Friday at the request of the news agency AWP. The online portal "Nau" had previously reported on this.

"With the 'International Surcharge', the airlines of the Lufthansa Group - and thus also we as Swiss - compensate for part of the fees and costs that cannot be influenced. Fuel is one item in this surcharge," the Swiss spokesperson continued.

Jet fuel prices have exploded

The price of aviation fuel has more than doubled in the past month: a barrel of aviation fuel (159 liters) costs an average of 214.70 US dollars in Europe this week, according to statistics from the International Air Transport Association (IATA). This means that kerosene prices have increased significantly more than oil. This has "only" increased in price by 50 percent in the past month.

In addition, aviation fuel is more expensive in Europe than in other regions of the world. In North America, for example, a barrel of kerosene costs just 179 dollars. Prices of over 200 dollars per barrel are only charged in Africa and Asia.

Surcharge varies depending on the route

Edelweiss said that the surcharge varies depending on the route. "We are constantly monitoring the development of fuel prices and the market situation. Whether and in what form this will result in possible further adjustments depends on various factors and cannot be predicted at present," said a spokesperson.

With regard to possible fuel shortages, Swiss explained that the supply of aviation fuel at the hub in Zurich is guaranteed. "We do not currently see any specific restrictions on flight operations at our destinations either. However, we are monitoring the situation very closely - especially in Asia," said the Swiss spokesperson.

Should supply bottlenecks occur, Swiss is most likely to experience them there. The reason for this is that Asia is heavily dependent on products from the Persian Gulf and China, said the spokesperson.

This is explosive. Swiss has expanded its flight connections to Asia in recent days. It will double the number of flights between Zurich and Delhi by the end of May. The reason for this is the marked increase in demand because the flight hubs in the Gulf region are only operating at minimum capacity due to the war.

"No adjustments to our flight program are currently planned in view of the kerosene supply, not even on our connections to Southeast Asia," the Swiss spokesperson continued. "The supply is currently guaranteed." At the same time, the situation is dynamic and could change at short notice. "We are taking the necessary precautions within the Lufthansa Group to be able to react quickly and in a targeted manner if necessary."

Price shock comes with a delay

So far, Swiss and Edelweiss have not yet felt the full impact of the fuel price shock. This is because the Lufthansa Group buys around 85 percent of its fuel six months in advance in order to protect itself against sudden fluctuations. The current price explosion will therefore only be reflected in the fuel bill after a few months.

Last year, Swiss paid around CHF 1 billion for fuel. This made the fuel bill the airline's largest single cost item, as Chief Financial Officer Dennis Weber told the news agency AWP three weeks ago.

And yet Swiss had still benefited from the fall in fuel prices last year. This year is likely to be very different. If prices remain at their current level, this will impact the results by at least a three-digit million amount.