Loganair Statement on the Impact of Rising Global Fuel Price
The UK’s largest regional airline, Loganair, has announced that it will add a fuel surcharge on to new ticket sales as it responds to increasing worldwide fuel prices and has laid out the steps for its removal in line with global oil prices falling.
In a presentation to today’s [Thursday 10 March] planned meeting of the Shetland External Transport Forum, Loganair’s Chief Executive, Jonathan Hinkles, said:
“The tragedy of war in Ukraine is all too apparent, and the human consequences of that are clearly – and dreadfully – visible. Last week, Loganair made contact with councils and regional Governments of the communities it serves to offer assistance with free travel across its route network for people displaced by the conflict. We stand ready to help in any way we can, and we’ve developed contingency plans to deploy our freighter aircraft to fly medical or humanitarian aid directly from Scotland to locations in eastern Poland if the need arises.
“We have also taken every possible step to ensure that none of our supplier base or trading links benefit Russia or Russian interests in any way. I’m confident that there were, and are, no such links in place.
“Closer to home, the economic consequences of the war are also being felt keenly across the airline industry and the entire economy, given the very significant rise in worldwide fuel prices in recent days.
“Loganair has already fixed the price for over 50% of its expected fuel volume for the 12 months from 1 April 2022 using financial hedging instruments. For the remainder of our fuel volume, the rise in global oil prices equates to an additional cost of £4.7 million in the coming year at today’s oil price. It is simply impossible for us to absorb this impact, especially where airlines including Loganair still face significant uncertainty over the pace of recovery in passenger numbers from the pandemic.
“We’ve realistically no option but to introduce a fuel surcharge on new ticket sales, which will apply to new sales from 21 March onwards. Many other international airlines have already taken this step.
“This isn’t something that we wished to do, nor is it a step that we have taken lightly. Although it will be unwelcome, I trust that this represents a transparent response to worldwide circumstances which is preferable to an opaque, and permanent, increase in basic air fares.”
The surcharge of £3.95 per one-way journey will apply on all new bookings made on routes save for routes flown under Public Service Obligations. It will be included in the headline price displayed when selecting flights on the Loganair website - but for full clarity, will be shown separately once flights have been selected into the customer’s “on-line basket”.
Loganair is only able to contain the surcharge to these levels due to the fuel hedging that it already has in place for most of its 2022-23 fuel requirements.
In line with today’s announcement, the airline has also clearly laid out the steps for the fuel charge’s removal as and when global oil prices fall. If the price of Brent Crude Oil falls below $110 per barrel for six consecutive weeks, the surcharge will be halved; if it falls further, below $85 per barrel for six consecutive weeks, then it will be removed completely.
The eligibility for the fuel surcharge will be determined by the date of booking and not the date of travel, therefore no fuel surcharge will apply to existing bookings already made.
