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Tuesday, Oct. 28, 2008

Flight fuel surcharges to linger till year's end


Staff writer

People hoping to travel abroad will have to wait until January for cheaper flights even though oil prices are plunging and the yen is rapidly strengthening against the dollar and euro.

Airlines operating from Japan set fuel surcharges in three-month intervals that must be approved by the Land, Infrastructure, Transport and Tourism Ministry. The new surcharges, for which carriers refer to the average Singapore kerosene price from August to October, kick in New Year's Day.

"Given the current situation surrounding fuel prices and exchange rates, surcharges will definitely fall" starting Jan. 1, Japan Airlines spokesman Soichi Yotsuki said Monday. All Nippon Airways spokesman Shinichi Shinkawa also said that the surcharges will drop.

Yotsuki said the October-December surcharge for flights from Narita to Hawaii is ¥44,000, the same price as the basic airfare during the cheapest period in the quarter. Tickets have to be purchased seven days prior to departure.

The July-September surcharge was ¥40,000, while the April-June rate was ¥28,000. Airfares are not affected by fuel costs but by demand, so carriers raise fares over Christmas and other peak seasons, he said.

Singapore kerosene, which JAL and ANA use for fuel, peaked at 396.39 cents per gallon in July and fell to 286.89 cents in September, a level near that in February and March, according to the U.S. Energy Information Administration, which quotes the price only by month.

That only shows the drop in dollar terms. It has dropped further via the yen. The yen was quoted around 94 to the dollar Monday after touching a 13-year high of 90.93 on Friday. The yen changed hands at around 110 against the dollar in August.

The carriers' move also benefits travel agencies, as airfare and surcharges account for about 60 percent to 70 percent of their tour package prices.

But H.I.S. Co. said it may be able to offer better deals in packages earlier than January because hotel and other costs are denominated in destination currencies and thus will be cheaper in yen.

"If the exchange rate remains near where it stands now, we may be able to cut the tour package price within this year," said Takashi Nakatani, a spokesman of H.I.S., which owns No. 1 Travel and Just Travel.

JTB Corp., Japan's largest travel agency, said its package prices excluding airfare and surcharges will not change easily even though the exchange rate fluctuates rapidly.

"Our company is not affected by exchange rates very much," JTB spokeswoman Megumi Ashizawa said. "But if the yen remains strong like now, we may consider" lowering prices.

Still, a "strong yen is good for Japanese tourists who purchase famous brand products overseas. I hope it will help the industry," she added.

The number of overseas travelers from Japan fell 9.7 percent to 1.4 million in September from the same month last year as a slowing economy and high surcharges cooled consumer sentiment, according to the Japan National Tourist Organization. It has fallen year on year every month this year.



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