U.S. Airline Surcharges Set Record at $420 as Oil Prices Climb


United Continental Holdings Inc. (UAL)Delta Air Lines Inc. (DAL) and rival U.S. carriers added a record $420 in fuel surcharges to round-trip European fares as soaring oil prices propelled first-quarter losses.
Across the industry, surcharges are as much as 50 percent greater than those put in place when fuel prices reached a record three years ago, according to air-travel website BestFares.com.
Jet fuel has become airlines’ biggest operating expense, surpassing labor and climbing to an average $2.96 a gallon from January through March, up 41 percent from a year earlier. U.S. carriers raised surcharges and fares and trimmed expansion plans to try to preserve the full-year profitability achieved in 2010, when demand rebounded after the financial crisis.
“No one foresaw the dramatic increase that has occurred over the last three months,” Chief Executive Officer Gerard Arpey told American Airlines employees in an April 20 e-mail. “It is beyond frustrating to see the fruits of our labor wiped out by something over which we have seemingly little control.”
Combined first-quarter losses for the five biggest U.S. airlines widened to $951 million from $892 million a year earlier. Among the five, only Southwest Airlines Co. (LUV) reported a profit.