News

OPERATORS could be forced to raise prices for next year because of the soaring cost of oil.

Fuel prices have hit a 14-year high - an increase of around 40% on last year - sending airlines’ costs spiralling.

British Airways was the first UK carrier to react last week, imposing a £5 surcharge on all fares, and other full-service scheduled carriers are considering similar moves.

Operators are unlikely to add surcharges to brochure prices for this year, but may raise them in 2005.

An ABTA spokesman warned: “Most tour operators ‘hedge’ their oil so it shouldn’t be an issue for 2004, but we may see increases next year unless the fuel price drops.

“Oil is a major cost for operators and they will have to cover the increase somehow.”

None of the big four ruled out price rises. A MyTravel spokeswoman said: “It’s too soon to say. The fuel increases could just be a blip.”

Thomas Cook said there would be no change for the remainder of the year, but admitted prices may have to go up next year if the cost of fuel doesn’t come down, while First Choice and TUI adopted a similar line.

Prices rose rapidly during the last oil crisis in the early 1990s.

Hoseasons chief Richard Carrick predicted a rise in domestic breaks if prices increase. He said: “The consumer will be unwilling to accept further fare increases on their summer holidays.”

Low-cost airlines have slammed BA for slapping the extra £5 on return flights. The move came despite the carrier stating in its annual report it had a “fuel risk policy” to protect against oil price rises.

Ryanair boss Michael O’Leary said: “As usual, the first instinct of BA is to gouge passengers.”

EasyJet chief executive Ray Webster said: “Rather than taking steps to plug the hole in BA’s cost base, higher fares will result in fewer people travelling, lower load factors and less revenue.”