Scoot to boost fares by an average of 5 percent

August 03, 2018
Scoot fares increase
A Scoot Dreamliner. Photo: Scoot

Scoot will increase fares by an average of 5 percent across its network from September 1 to claw back increased fuel costs.

The low-cost carrier said the fuel price had surged by almost 40 percent year on year and was now close to $US90 per barrel.

It said the increase would generally translate to between $S5 and $S30 per sector, depending on flight duration.

Fuel comprises an on average 32 percent of Scoot’s total operating costs and the increase in fuel prices has pushed up its fuel expenditure by 31 percent year-on-year.

“Besides increasing fares, Scoot is also looking at containing its costs,’’ the airline said. “Some initiatives being considered include exploring ways to reduce fuel burn, review of suppliers’ contracts and measures to improve productivity and keep manpower resources lean, among others.”

International Air transport Association director general Alexandre de Juniac warned in June that fares would rise as a result of the increase in fuel prices.

He noted that if airlines were to survive a significant fuel increase, they needed to pass part of it on to passengers and fares.

“Otherwise they will go into bankruptcy,’’ he said. “It’s impossible to cope with an increase, a doubling of the fuel price, without passing a part of it on (to) the price.’’

IATA has predicted that fares will rise by more than 3 percent in 2018 but said last month premium passengers were bearing the brunt of base fare rises.

“Yields in the premium-class cabin have trended upwards since mid-2017,’’ a report covering  May-June said. “However, premium-class demand is less price sensitive than its economy counterpart, which has allowed airlines to pass through higher fuel costs onto premium passengers to a greater extent than in economy.”

A report by Carson Wagonlit Travel predicted fares would continue rising in 2019  with increases averaging 2.6 percent.

However, some regions would be harder hit by rises than others.

READ: Where the big airline and hotel price rises will be in 2019.