WestJet will charge more
WestJet Airlines Ltd. is considering increasing its fares or adding a fuel surcharge to all tickets to combat soaring fuel prices.
Sean Durfy, the low-cost carrier’s president and chief executive, said WestJet has yet to put fuel charges on its tickets, and is instead trying to mitigate rapidly rising fuel prices by effectively managing costs, increasing utilization and raising fares where competitively possible.
In the first quarter, WestJet increased fares “probably three times,” Durfy told analysts in a conference call Tuesday. However, he said the true impact of fare increases don’t really offset the rise in fuel costs, which is the issue.
“A fuel surcharge would go potentially on all tickets sold, and in that case you can capture the true increase of fuel,” he said.
Durfy said it’s getting increasingly difficult to weather the high cost of fuel, adding it’s the speed in which these costs are rising that’s having the real impact on WestJet.
On a per litre basis, WestJet’s fuel costs increased 29.6 per cent, to 82.96 cents per litre in the quarter, compared with 64.02 cents per litre last year. During the month of March alone, jet fuel prices reached $146 US per barrel. However, the average market price for jet fuel in the first quarter was $119.85 per barrel, a 60 per cent increase compared with $74.89 per barrel in the same period in 2007.
Durfy made the comments during a conference call to discuss WestJet’s first quarter 2008 financial results. WestJet reported a 76 per cent jump in profits during the period, its strongest first quarter results to date.
WestJet’s first quarter net earnings were $52.5 million, or 40 cents per share, compared with $29.9 million or 23 cents per share for the same period last year. Revenue was $599.3 million, compared with $470.7 million last year, an increase of 27.3 per cent.
Source: Calgary Herald
Tags: airlines, fuel costs, price rising, WestJet