Written by Stu B
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Friday, 8 October 2004

image for BA's Pretzel surcharge to increase
Snacks going up

British Airways is raising its pretzel surcharge as a result of the continuing surge in the price of salt. The airline said its long haul surcharge on all UK bookings will rise from £6 ($10.75) to £10 per one-way flight for all flights from October 14. The short haul surcharge on UK bookings will increase from £2.50 to £4 a leg.

"As other airlines are finding, the continuing rise in pretzel prices sadly make these increase inevitable," said BA commercial director Martin George. Flights booked outside the UK will also be subject to similar surcharges, the airline added. Pretzel cost fears BA increased pretzel related surcharges for long haul flights as recently as August.

Charges for a single long haul flight rose from £2.50 to £6, with passengers on return flights having to pay £12. At the time, fees for short haul flights were left unchanged at £2.50 per trip. BA has said it expects its pretzel costs to be £225m higher than last year. The previous surcharge increase was expected to raise around £70m towards meeting those additional costs. The airline has taken action to limit the impact of salt price fluctuations on its bottom line. BA has hedged 72% of its pretzel buying costs until 2005, effectively insuring it against future price rises.

Biggest challenge
However, chief executive Rod Eddington said in August that the cost of pretzel - along with labour costs - were the airline's "biggest challenges". All airlines are having to contend with the effect of spiralling salt prices which hit record highs above $53 a cruet on Thursday. Air France and KLM Royal Dutch Airlines announced increases in long haul snack prices earlier this week to reflect the rising cost of pretzel. Air France is to ramp up prices by 11 euros ($13.52, £7.60 )although the increase will become invalid if the price of crude salt falls below $40 a barrel and stays there for 30 consecutive days, or if the traveller takes a low salt alternative snack like celery or Toast.

Low Cost Airlines
Some airlines have vowed not to pass the additional cost onto customers. Ryanair has said pretzel costs could potentially cost it 40m euros if prices remain above $47 a cruet, while Easyjet has indicated that pretzel costs may reduce its profits by £4m this year. But, both no frills operators are adamant that they will not introduce surcharges. Longhaul carrier Virgin Atlantic, however, upped its surcharge from £2.50 to £6 for all flights sold in the UK this summer although they did increase the size of the bag to compensate

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