Foreign Carriers Add Fees

In response to mounting insurance and security costs associated with the Sept. 11 terrorist incidents in the United States, several foreign carriers implemented surcharges on all tickets. These announcements on five continents came as financially pressured airlines made moves similar to their U.S. counterparts, including schedule and staff reductions.

Meanwhile, cash-strapped Swissair last week suspended all flight operations before the Swiss government stepped in. Though limited flights had resumed at press time, the deconstruction of the larger SAirGroup will have a chain reaction, jeopardizing other carriers, and inexorably altering the European airline industry. For example, the group had held a 49.5 percent stake in Sabena but did not provide the Belgian carrier with a huge cash injection as planned.

It remains to be seen what the future of Swissair will look like, though one plan is to merge operations with partner Crossair, a low-cost Swiss regional carrier.

At press time, however, Sabena was continuing operations, after asking for protection from creditors and obtaining bridge loans from the Belgian government.

Other European carriers, struggling but still standing, began passing along heightened costs. KLM Royal Dutch Airlines added a $5 surcharge on all flights worldwide and next week will raise by 5 percent fares between the Netherlands and U.S. and Middle Eastern cities.

Lufthansa, which earlier said "a significant increase in ticket prices and cargo rates now seems inevitable," last week slapped on an additional $8 for each flight segment. Alitalia also added a surcharge for each flight segment, while SAS last week hiked prices 5 percent to offset "significantly higher insurance premiums" and costs associated with tighter security.

Beginning last week, Singapore Airlines added a $1.25 "war surcharge" on tickets for every flight. Other carriers adding surcharges included Malaysia Airlines, Qantas Airways and Varig. In Canada, Air Canada, Canada 3000 and WestJet all now charge a C$3 (US$1.90) fee per passenger on every one-way flight.

On the operations front, Air Canada, which said it will lay off a total of 9,000 workers and ground 84 aircraft, slashed its transborder schedule by 20 percent.

Across the Atlantic, British Airways suspended London Gatwick-New York JFK flights and reduced frequencies from London Heathrow to several destinations in the United States, including Boston, Houston, New York, San Diego and Washington.

Air France will ground some of its 747s and reduce its U.S. winter schedule by 20 percent, while maintaining service to all 12 U.S. gateways.

Lufthansa cut its transatlantic capacity by 20 percent. Berlin-Washington service was discontinued and frequency reductions will affect flights between Frankfurt and Atlanta, Dallas, Houston, Philadelphia and Phoenix, as well as the Munich-Los Angeles route.

KLM for much of October canned Amsterdam-Atlanta flights and reduced service to Los Angeles, Newark and New York JFK. Its total North American capacity reduction is 15 percent, and 5 percent worldwide.

Other foreign carriers cutting U.S. flights included Alitalia, Korean Airlines, Malaysia, SAS and Singapore.