Scoot to increase airfares by 5% from Sept; others not following suit for now
Scoot noted that it had removed fuel surcharges from its fares in March 2016, when fuel prices fell to six-year lows.
SINGAPORE — Planning a year-end getaway with the family? Expect to pay between S$5 and S$30 more for airfares on low-cost airline Scoot, which will introduce a 5 per cent fare hike from September 1.
The airline cited rising fuel prices for its decision.
“With fuel comprising on average 32 per cent of Scoot’s total operating costs, the rise in jet fuel prices have pushed up Scoot’s fuel expenditure by 31 per cent year-on-year,” the airline said in a press release on Thursday (Aug 2) pointing out that jet fuel prices have surged “almost 40 per cent year-on-year and now stands at close to US$90 per barrel on average”.
The airline noted that it had removed fuel surcharges from its fares in March 2016, when fuel prices fell to six-year lows.
Faced with a return of high fuel prices, Scoot said that it is looking at various ways to rein in operating costs.
Some of the initiatives being considered include exploring ways to reduce fuel burn, a review of suppliers’ contracts and “measures to improve productivity and keep manpower resources lean”.
In response to TODAY’s queries, Scoot said it has no plans to cut staff strength.
The carrier said it plans recruitment and headcount according to its business plans and objectives.
“We remain committed to our business plans to stay competitive, and will require the necessary talent to see through our plans,” said Scoot.
“As such we have no plans to lay off employees, although we will definitely review any headcount increase very stringently as well as look into ways to increase productivity.”
Other budget and regional airlines contacted by TODAY said they have no plans to increase fares at the moment.
AirAsia said that it reviews its fares “throughout the day based on a number of factors, including oil”.
“We have built a lot of resilience into our business by being very disciplined about non-fuel costs, and we are confident we have sufficient latitude to manage any change in oil price,” said the Malaysian low-cost airline.
TODAY understands that Jetstar’s fares will also remain stable at the moment.
The carrier said that its fares are “very competitive”.
“We regularly review our fares and make changes based on market conditions, including rising fuel costs,” said a Jetstar spokesperson.
National carrier Singapore Airlines said that it will not be raising its fares.
“No. Our airfare pricing is dynamic based on supply and demand,” said a spokesperson.
Last month, the Global Business Travel Association said that a strong global economy and rising oil prices are expected to push up the cost of air travel in 2019, with fares seen rising 2.6 per cent and hotel rates up 3.7 per cent.
Crude oil prices fell to the lowest in more than five weeks on Wednesday, according to Bloomberg.
The report cited a surprise upswing in US crude inventories and increases in production from OPEC and Russia as driving worries that global supply levels are rising.
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