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Airlines in Korea to increase fuel surcharges in October

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Travelers line up at Incheon International Airport. [YONHAP]
Airline fuel surcharges for international flights will rise next month after a brief fall, with the weak won as much to blame as high oil prices.

The increases come just as travel is beginning to return to normal with the ending of the pandemic and the easing of entry restrictions globally.

Korean Air Lines will be charging an extra 36,400 won ($26) to 270,200 won starting October. That is an increase of 4.0 percent to 8.4 percent from the fuel surcharges the previous month.

Asiana Airlines will impose fuel charges of 39,300 to 219,500 won in October, for an increase of between 10.4 percent and 11.3 percent from the previous month.

The October surcharges were calculated using the average price of jet fuel traded on the Singapore Exchange between Aug. 16 and Sept. 15 and the average exchange rate during the same period.

During the one-month period, the average jet fuel price was $133.90 per barrel, up 4.8 percent on month.

The exchange rate may have been as much of a factor as the change in the fuel price, with the won losing about 4 percent of its value over the past month.

“Jet fuel prices are still high, but the worst has passed,” said Park Su-young, an analyst at Hanwha Investment & Securities. “Despite fuel prices starting to become more stable, the won-dollar exchange rate has just started to jump.”

“Because both fuel costs and surcharges are affected by the dollar, exchange rates could hurt travel demand, which has just recently started to recover.”

Fuel surcharges have increased steadily this year, reaching a peak in July. The surcharges were unchanged in August and fell in September before rising again in October.

Flight bookings are expected to increase in September as it is the last chance to buy tickets at lower prices, combined with easing of various travel restrictions.

Demand may drop in October even as restrictions for entry to Japan, which has been one of the most closed major economies, start to ease.

“The won-dollar exchange rate is very close to breaking the 1,400-mark, and that makes travel expensive overall,” said Park Sun-young, an analyst working for the Stock Research Center. “Flight ticket prices and other costs, such as hotels, will also be very high, and the high exchange rate could lessen the travel demand despite various ending of restrictions encouraging international travel.”

BY LEE TAE-HEE [lee.taehee2@joongang.co.kr]

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