In a release here, the Airline said the surcharge was effective from July one and would depend on the routes and destinations. It added the speed at which the world oil prices were upswinging was the biggest challenge for airlines. There is no time to manage the transition. While any business has to make sure its product reflects the cost of production, SriLankan is not passing on the total increase in the cost to its passengers.
It has, like most international airlines, introduced a fuel surcharge with effect from July one, but will recover only 50 per cent of the additional costs incurred. At this juncture of volatility and soaring prices, the most practical way to respond to the sharp increase in cost (fuel consists of 52 per cent of the airline's cost as compared to 27 per cent of the total cost last year) is by way of a fuel surcharge based on the distance, the release said.
Last year, International Air Transport Association (IATA) had predicted a record profit for 2008 for the airline industry USD 9.6 billion - it is not to be. It has now predicted a total net loss of between USD 2.3 billion and USD 6.1 billion for the airline industry in 2008 depending on the level of the price of fuel.
While this is the magnitude of the crisis caused within a year, the situation does not seem to be improving, despite analysts predictions. This situation will eventually lead to a fundamental re-pricing of fares if fuel prices do not stabilize.