Fuel Surcharge Rises Again During Summer Vacation Peak..."Airfare Prices Up"

[Image source=Yonhap News]

[Asia Economy Reporters Hyunseok Yoo and Donghoon Jung] Domestic fuel surcharges for August, the peak summer vacation season, have reached an all-time high. This is despite the decline in international oil prices, as the price of aviation fuel remains at a high level. Fuel surcharges for international flights may also increase, which is expected to further burden consumers ahead of the holiday season.

According to the aviation industry on the 6th, Korean Air and Asiana Airlines raised domestic fuel surcharges for next month from 19,800 KRW to 22,000 KRW. This is a 300% increase from 5,500 KRW in February and marks the highest level since its introduction in July 2008.

The international fuel surcharge for next month is scheduled to be decided in mid-month. The international fuel surcharges for this month, decided last month by Korean Air and Asiana Airlines, range from 42,900 KRW to 325,000 KRW and 46,900 KRW to 267,300 KRW respectively, based on one-way distance. Like domestic surcharges, these are also at record highs.

Although international oil prices have recently declined, the price of aviation fuel remains high, so international fuel surcharges are likely to remain the same or increase compared to this month. Typically, the Singapore jet fuel (MOPS) spot market price, which determines fuel surcharges, recorded $174.01 per barrel on the 21st of last month and continued to fall to $150.62 per barrel on the 30th. However, the average price from the 16th to the 30th of last month was $164.32 per barrel, exceeding the average price of $152.88 per barrel from May 16 to June 15.

The reason aviation fuel prices remain high despite the recent drop in international oil prices is that it takes time for the distribution market to reflect these changes. A refining industry official explained, "It usually takes about two weeks for petroleum products to be distributed from refineries to airlines and gas stations," adding, "Considering stockpiles, it takes about four weeks for international oil prices to be reflected in the actual aviation fuel or gas station distribution prices." He further noted, "Due to the suppressed demand during the COVID-19 pandemic, the demand for aviation fuel is so high that its price tends not to decrease compared to other fuel types and may even become more expensive."

With fuel surcharges rising consecutively, consumer burdens are expected to increase as well. As demand for overseas travel has surged sharply, airfares have skyrocketed, and with fuel surcharges also rising significantly, the total airfare consumers must pay has increased. An industry official said, "As pent-up overseas travel demand is exploding, air travel demand will not necessarily decrease," but added, "It is true that the increased costs included in airfares are a burden to consumers."

This content was produced with the assistance of AI translation services.