Virgin Blue’s elimination of domestic fuel surcharges announced on Christmas Eve seems to put Qantas to shame, but travel retailers are chatting about its likely response as being a headline grabber.

Qantas doesn’t look good for hanging onto an $18 domestic fuel surcharge when its subsidiary Jetstar is charging only $9 and Virgin Blue and Tiger are at $0.

But wait a minute. According to the gossip (and it is nothing more at this stage) Qantas could seize the mantle of being the first of the major carriers to abolish the domestic surcharge if it did so immediately.

The Virgin Blue surcharge doesn’t come off until 31 December, and Tiger has never had one.

Gossip aside, Qantas has already been shovelling last minute fare discounts into the domestic market that might be causing acid reflux at Jetstar. It has shown its hand. It will discount deeply to try and boost loads and thus cover the costs of each flight over the holiday season, to bridge the gap before business travel usually returns in late February to mid March. An $18 fuel surcharge during this period makes Qantas look twice as greedy as Jetstar.

All the signs make it reasonable to predict a ferocious New Year fare war will break out, perhaps even before midnight on 31 December, and with oil persistently lower than $USD 40 in recent days, a fuel surcharge would be an impediment to credibility.

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