Emirates drops fuel surcharge as competition rises

Emirates drops fuel surcharge as competition rises

Emirates removes fuel surcharge due to drop in oil prices, or so says the airline. But could it be because of the imminent entry of strong contenders?

May 8, 2011 3:38 by p.deleon

If you were one of those who’ve bought a ticket and travelled with Emirates Airlines in the last three weeks, then you’re probably going to feel a little gypped with this news. For the rest of you landlocked readers, this is good news.

Emirates Airline has dropped the sky-high (sorry we couldn’t help it) fuel surcharges it started imposing last month. This means it will remove the extra 300AED for the fuel surcharge it added last month for economy class passengers and the extra 1,040AED fee for the business class passengers.

This is good news and can only mean a decrease in fuel prices. Although it’s still unclear if the price drop will remain. The surcharge was imposed at a time when the price of oil had reached US$110 (Dh404). Today, the crude oil price was listed by Bloomberg at $97 a barrel.

This is welcome relief for expatriates, of course, who are starting to plan summer holidays and weekend summer escapes from the UAE.

If just for a few seconds though, Kipp does wonder how much the fuel surcharge affected passenger intake for the airline in the last three weeks. More specifically, was it enough to make passengers opt to fly with a competitor with a better price? If so, then good on Emirates for looking at ways to nip this shift at the bud.

After all, competition continues to heat up in the UAE’s aviation sector. And it seems that most of the business is going towards low-cost options.

Malaysia-based long-haul, low-cost AirAsia X, for example, is planning to bring back its Malaysia-UAE routes next year—although still undecided if the port will be in Dubai or Abu Dhabi. In February last year, AirAsia X decided to stop its Abu Dhabi service “for commercial reasons” (read: not enough profit).

News of the company’s renewed interest in the UAE could only mean there’s potential growth in the region for low-cost, long-haul travell—a sub-sector in the aviation industry where fuel surcharges do not have a place.

In addition, Flydubai is eyeing new routes and a new holiday packages division, as it targets 140 per cent passenger rise this year compared to the previous year, according to an article in The National.

Meanwhile, the UAE’s online travel market will receive a major boost if Expedia’s plan to launch a UAE version comes true. According to Hari Nair, the company’s VP of market management, an Arabic site is on the 24-month agenda.

In an article in The National, research firm Euromonitor cites the number of air ticket sales in the region through online channels is expected to increase from 10 per cent last year to 14 per cent by 2015.