Scoot Passengers Face 5% Fare Increase For All Flights
Budget airline Scoot has announced that it will increase its fares for every flight, starting 1 Sep 2018.
The increment will lie between $5 to $30, making it an average increase of 5% across its network of flights.
This is due to the growing cost of jet fuel in recent years.
Rising cost of fuel affecting airlines
According to Scoot, the current cost per barrel of fuel is US$90 on average.
Let’s have a look at the trends in jet fuel cost in recent years.
As you can see, current jet fuel prices are the highest in 4 years.
They have been on an upward trend for almost three years straight.
Significant portion of operating costs
Fuel costs comprise approximately 1/3, or 32%, of Scoot’s operating costs as of now.
Its fuel expenditure has been pushed up by 31%, as compared to last year.
Meanwhile, Scoot reported a $1 million profit in the June quarter, a $2 million drop from last year’s $3 million.
Scoot says they’ll find other ways to reduce cost
On top of passing the cost on to consumers directly, Scoot is also seeking other ways to reduce the impact of fuel prices on profits.
For instance, Scoot has announced its intent to find means to cut costs by reducing fuel burn and reviewing supplier contracts.
Keeping manpower lean and increasing productivity are also options being considered.
More fare hikes across the board?
Scoot isn’t the only airline to raise its fares because of increasing fuel prices.
In May, Air New Zealand Ltd increased its fares for domestic flights.
Regulators in Japan and Taiwan have permitted airline companies to impose fuel surcharges to cope with the oil prices.
So, the worry is, that other airlines will also seek to increase their fares.
We really gotta keep our fingers crossed.
Featured image from Wikipedia.
