Global Airline Group Eyes Fare Hikes of 4%-8%

The world’s leading airline industry group today set target increases of 4% to 8% for passenger fares on international flights to make up for high fuel prices caused by the Persian Gulf crisis.

The International Air Transport Assn. also said today that airlines intend to raise cargo rates by between 3% and 7%.

Decisions made at the four-day conference hosted by the association are subject to the approval of governments.

The airlines want the increases to take effect by mid-December, but association sources said some governments might not take up the matter until after the Christmas holidays.

The airline industry, whose profits were declining even before the Persian Gulf crisis, has been hit hard by the rising cost of jet fuel. The industry said in a statement the increases are “to recover, at least partially, continued cost increases, particularly in fuel prices.”

It was the second fare hike linked to the 3-month-old gulf crisis. In August, airlines set an initial increase of up to 8% in international passenger fares.

Industry officials say the previous fare increase, which generally took effect this month, failed to cover higher costs caused by the jump in oil prices. Seesawing crude-oil prices in recent weeks have added to the financial strain.