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Fuel surcharges again on IATA agenda

LONDON: Earlier this month the International Air Transport Association dusted down old proposals for international agreed price triggers at which airlines would introduce or suspend cargo fuel surcharges.

An IATA spokesman said the proposals are now sitting in the intrays of transport ministries around the world.

"We resurrected a 1997 proposal," he said.

Key signatories for the proposa - it would be the first such intergovernmental agreement to impose fuel surcharges - would be the United States, Europe and Japan.

There is no set timetable for the necessary unanimous governmental signatures and the IATA spokesman said that until then airlines have no legal immunity if they use the IATA jet fuel index triggers as the reason for imposing surcharges.

A copy of the draft seen by Reuters says surcharges would be imposed when the IATA index - 142 last week - reaches 130 and dropped when it falls below 110.

A special IATA meeting would be called if the index rose above 150.

Over the past six weeks airlines around the world have announced air cargo fuel surcharges of a flat 10 U.S. cents a kilo to into force on February 1.

Freight charges vary on distance and the surcharges will add about 20 percent on short flights and about 5 percent to long haul cargo routes.

The proposed fuel surcharges are separate from underlying airline tariffs and are seen as a temporary measure in times of high oil prices, the IATA spokesman said.

The index is based on the June 1996 level of five world spot prices when the average stood at 53.5 cents per US gallon.

The IATA proposal was originally due to be adopted in late 1997 but was shelved as prices then were in the early stages of a slide from six year peaks reaching the nadir in February last year.

In 1996/97 prices rose on a supply shortage but then more than halved as OPEC taps were turned on and Iraqi supplies combined to produce a glut in world markets. Current prices reflect OPEC deciding early last year to counter low prices by restricting exports.

The IATA spokesman said the index is available in IATA each Wednesday and covers spot prices over the previous two weeks. It is then circulated amongst IATA member airlines.

IATA has not publicly detailed the calculation of the index.-Reuters