As the war among the United States, Israel, and Iran drags on and jet fuel prices surge, fuel surcharges that airlines pass on to fares have jumped sharply. In particular, fuel surcharges for air cargo are set to rise more than for passenger travel, increasing the burden on exporting corporations.
According to the airline industry on the 3rd, Korean Air Lines and Asiana Airlines will raise fuel surcharges for air cargo departing from Korea by an average of 334% from the previous month. The surcharges will apply from the 16th of this month through the 15th of next month. Earlier, starting on the 1st of this month, Korean Air Lines raised passenger fuel surcharges reflected at ticketing by 210%, and Asiana Airlines raised them by 214%.
By segment, the fuel surcharge for long-haul routes rose 329%, from 510 won to 2,190 won per kilogram. Medium-haul routes rose 338%, from 470 won to 2,060 won, and short-haul routes rose 336%, from 450 won to 1,960 won.
AIRZETA Co., a cargo-only airline, also raised fuel surcharges by an average of 326% over the same period. Short-haul routes increased from 450 won to 1,920 won per kilogram, medium-haul from 470 won to 2,020 won, and long-haul from 510 won to 2,150 won.
Typically, short-haul routes include Japanese cities and cities in eastern China with an average flight time within two hours. Medium-haul routes include countries in Asia and Oceania excluding India and Australia/New Zealand, and long-haul routes include Europe, North America, Australia, and India.
Global cargo airlines operating in Korea, such as FedEx and UPS, peg their fuel surcharges to the U.S. Gulf Coast jet fuel price announced weekly by the U.S. Energy Information Administration (EIA), and these surcharges are also rising as oil prices climb.
With cargo fuel surcharges more than tripling, freight rate pressure on exporting corporations is expected to intensify. According to the Hong Kong TAC Index, as of the 30th of last month, before the new surcharges were reflected, the global air cargo rate indicator, the "Baltic Air Freight Index (BAI)," reached 2,396, up 9.3% from the previous week.
Industries that mainly export via air cargo include semiconductors, electronics and electrical products, and pharmaceuticals. Air transport also accounts for a large share of exports by small and midsize firms. According to figures the Ministry of SMEs and Startups released recently on reports of damage and difficulties among small and midsize corporations related to the Middle East war, rising logistics costs accounted for 114 cases, or 35% of all submissions.
An airline industry official said, "There is a high likelihood that fuel surcharges will rise much more next month, when the increase in oil prices caused by the war between the United States and Iran is fully reflected," adding, "The difficulties of exporting corporations, already struggling with higher oil prices and weaker global demand, will deepen."