Cost of air travel and freight to increase
THE price of everything from food to building materials could rise this year as the cost of freight and air travel increases.
Earlier this month it was reported that Islanders are increasingly paying more to fill up their cars with the price of petrol rising by around six pence in two months.
Travel and shipping companies are now beginning to feel the pressure of heightened global oil prices, with many being forced to raise their charges.
Andy Jehan, chairman of the Chamber of Commerce’s transport and tourism committee, warned that some Jersey businesses might be forced to pass on their higher freight costs to consumers.
‘Fuel prices have been increasing globally and going up locally as a result and what tends to happen is they get passed to the consumer,’ he said.
‘We might see some businesses absorb the additional cost but other businesses with smaller margins are likely to have to pass the cost on as the cost of transporting goods is significant.
‘It affects so many different areas, whether that is the price of food imported from the UK or building supplies – but it is impossible to say which businesses it will affect without knowing the costings or margins involved.’
This week Condor Ferries said that it had been forced to raise the price of its fuel surcharge – which is charged directly to customers – by £1 per metre on freight trailers and goods vehicles carried by the company. The average freight trailer is around 12 metres long. The charge does not apply to passengers travelling with their cars.
A spokesman for the company said: ‘Condor has introduced a £1 increase in the fuel surcharge applied to freight bookings from 1 June 2018 following further rises in its fuel costs across its fleet.
‘The increase directly reflects the escalating costs of fuel internationally, which have reportedly reached their highest levels since 2014. Any rise in costs which is beyond our control is regrettable.’
Jersey’s other major sea-freight company, Channel Island Lines, said that it was looking at how it would deal with rising oil prices.
Andy Cook, the company’s chief executive, said: ‘The impact of fuel costs on any shipping company is enormous. We, as a business, are now considering how to manage that.’
Airlines are also expected to be affected by rising fuel costs and airlines operating to Jersey have said they are working to limit price increases.
A spokesman for Blue Islands said: ‘Blue Islands faces the constant pressure of operating-cost increases across all business areas, rising fuel prices is one of these.
‘To continue to offer the value our customers expect, Blue Islands strives to balance these increases by continually pushing for cost reductions and efficiencies elsewhere.’
Meanwhile, Willie Walsh, the chief executive of British Airways, said it was inevitable ticket prices on all airlines would need to go up if oil prices do not go down.
In an article published by Travel Weekly, he said: ‘The fuel rise will have a significant impact on the cost base of all airlines.
‘It represents a challenge to the industry. I hope it moderates. But if the oil price stays where it is it will inevitably push up prices.’
In order to benefit from low fuel prices, most airlines buy large quantities of fuel at a set rate in advance – a practice also known as hedging.
However, a number of airlines are now starting to run out of cheaply bought fuel with some already raising their ticket prices.
A spokeswoman for Flybe said: ‘While hedging cannot guarantee against significant long-term price changes, Flybe does have a well-established hedging policy in place that is designed to provide certainty over a significant proportion of its cost base.
‘Adverse movements in this area do have the potential to impact upon the fares of all airlines, so in the medium term, now is the time to take advantage of current fares and book.’