Airlines introduce special fuel fee on cargo

 

By BONFACE OTIENO More by this Author

Nairobi-based carriers have added a fuel surcharge of between Sh11 and Sh41 per kilogramme to the cost of ferrying goods on the back of the high jet fuel price.

The price of the commodity has increased 36 percent in the last six months, prompting airlines to add the special levy to protect their margins.

The cost of jet fuel has hit a high of Sh136 a litre from Sh100 in January, forcing airlines to pass the extra cost to consumers to remain afloat.

The move could limit the number of goods that can be flown via air, slowing down the growth of the airline cargo sector.

Those using airlines are, on the other hand, incurring higher operating expenses.

A fuel surcharge is an extra fee that transporters charge to cover a higher-than-expected increase in the cost of fuel.

Karanja Ndegwa, chief executive at Jambojet, while admitting that demand for cargo business had picked up in its markets over the last few months, said they did not have a choice but to increase the charges.

“We have added a fuel surcharge of $0.1 (Sh11.87) per kilogramme but this will be dropped once the jet fuel prices go back to budget levels,” he said.

Jambojet started cargo operations in February after receiving regulatory approvals from the Kenya Civil Aviation Authority to fly goods on its passenger flights to local and regional destinations.

The carrier uses a Dash 8-Q400 type of aircraft that ferries passengers on its routes to transport cargo on its routes. The flight type that can accommodate up to 78 passengers can carry up to 1.5 tonnes of cargo in a single trip.

Jambojet charges $2,500 (Sh294,125) to ferry a tonne of cargo from Nairobi to Goma and $3,500 (Sh411,775) per tonne in the opposite direction.

If a $0.1 (Sh11.87) fuel surcharge per kilogramme applies, it means that the carrier will charge customers $2,576 (Sh306,230) per tonne from Nairobi to Goma. It will also charge $3,567 (Sh423,645) to ferry a tonne of cargo from Goma to Nairobi when the fuel surcharge is factored in.

Nairobi-based cargo carrier Astral Aviation also introduced a fuel surcharge of $0.35 (Sh41.5) per kilogramme in April.

“We have a fuel surcharge, which is $0.35 (Sh41.49) per kilogramme which we introduced in April. Unfortunately, I can’t share with you our shipping rates as it’s confidential,” Astral chief executive officer Sanjeev Gadhia told the Business Daily.

Higher jet fuel prices have been caused by multiple factors including reduced refining volumes and Russia’s invasion of Ukraine, which has cut exports of crude and refined oil products.

Jet fuel is the major cost for cargo carriers. Airlines have the option of hedging against higher fuel prices but it is an uncertain business.

botieno@ke.nationmedia.com