As international oil prices surge, fuel surcharges added to airfares are expected to jump sharply in April. There are concerns that the price of international tickets issued next month could be more than 100,000 won higher than this month on the same routes.
According to the airline industry on the 15th, the April fuel surcharges that domestic carriers will announce on the 16th are expected to rise significantly from the amounts applied this month.
This is because, due to the sharp rise in Middle East-driven international oil prices, the Singapore jet fuel average (MOPS) that serves as the basis for next month's fuel surcharge is expected to climb to at least 300 cents per gallon (3.785L) for the period Feb. 16–Mar. 15 this year. Compared with this month's surcharge, set based on the pre-Middle East crisis period of Jan. 16–Feb. 15 (204.40 cents per gallon), it is more than 1.5 times higher.
A fuel surcharge is an amount that airlines add to fares to offset losses from rising oil prices. Under the Ministry of Land, Infrastructure and Transport's distance-based system, each carrier adjusts and sets it monthly. When the Singapore jet fuel average per gallon is at least 150 cents (for international routes), it is levied in a total of 33 tiers; below that, it is not charged.
This month's fuel surcharge applied at tier 6 (200–209 cents). If the Singapore jet fuel average reaches 300 cents per gallon, it would jump 10 tiers in one month to tier 16 (300–309 cents).
If the average surges to at least 370 cents per gallon, the fuel surcharge tier becomes tier 23 (370–379 cents). This surpasses tier 22 (July–Aug. 2022), the highest tier since the current fuel surcharge system was introduced in 2016. At that time, as international oil prices climbed steeply due to the Russia-Ukraine war, the tier jumped eight levels in three months.
With the rise in fuel surcharge tiers, international fuel surcharges next month are expected to increase substantially. Based on Korean Air Lines, there is a view that the top-end amount could rise by tens of thousands of won from this month's 13,500 won–99,000 won. In July–Aug. 2022, the minimum was 42,900 won and the maximum was 325,000 won.
An airline industry official said, "Although it is difficult to predict the exact average because oil price volatility is so high, considering that since the Middle East crisis the Singapore jet fuel price once soared to more than $200 per barrel (476 cents per gallon), the tier applied next month is expected to jump by at least 10 levels."
Major airlines have already been raising fuel surcharges since the Middle East crisis. According to Reuters and Bloomberg, Hong Kong Airlines increased its fuel surcharge by up to 35.2% starting on the 12th. Air India imposed an additional charge of 399 rupees (about 6,000 won) on domestic and Middle East-bound flights from the same day, and from the 18th it will raise the fuel surcharge on North America-bound flights by $50 to $200.