Singapore Airlines Cargo, Lufthansa Cargo and Cargolux International Airlines all plan to impose war-risk surcharges to cover additional costs during the conflict in Iraq.
Singapore Airlines said its surcharge will be US25 cents per kilo, while Lufthansa and Cargolux have set their surcharges at just over 10 cents per kilo, or the equivalent in local currency. The Lufthansa surcharge takes effect Tuesday, while Cargolux's goes into effect March 27. The surcharges are based on actual weight and will apply worldwide.
It was not immediately clear whether other carriers will follow suit. Lufthansa, Europe's largest scheduled cargo carrier, and Cargolux typically act as price leaders. Jim Friedel, president of Northwest Airlines Cargo, which usually serves as a price leader in the U.S., said that the airline is studying the situation, but doesn't expect to make a decision by Friday.
James Healy, a spokesman for British Airways World Cargo, said charges are "under constant review. We're assessing all costs associated with our operation in view of the military activity." Officials at Japan Airlines, American Airlines and Air France said they have no plans to establish a war-risk surcharge.
Cargolux said the surcharge is necessary because of "unforeseen commercial and operational risks as well as additional costs. We are forced to change our operating patterns drastically. This translates to lowered payloads, longer routings and higher costs because Cargolux has to operate to and from alternate airports."
The new fees will mean additional costs for air-freight forwarders and shippers, who are already paying fuel surcharges of 20 cents a kilo and security surcharges averaging 15 cents a kilo.
"The closure of some Middle East airspace will result in diversions, longer flight times, and may require extra refueling stops," SIA Cargo said, adding that it is also implementing a range of heightened security procedures. "Customers may experience delays and extended processing times on some shipments. Nonetheless, SIA Cargo will take all possible steps to ensure customers' needs are fulfilled," it said.
The diversion of flights around the affected area will result in reduced capacity for bellyhold cargo on passenger aircraft, SIA Cargo said. As a result, it will adjust freighter schedules in order to meet the shortfall in bellyhold capacity wherever possible.
Asserting that the war has "far-reaching consequences for the entire aviation industry," Lufthansa noted that it has been forced to alter its flight schedules and make complex arrangements to re-route flights.
The airline said, "These measures will not only increase fuel consumption, but also the costs for additional staff, essential aircraft maintenance, extra handling services at airports and substitute charter aircraft. In addition, available cargo capacity of aircraft will be reduced due to the necessary re-routings and higher fuel loads."
Lufthansa said the surcharge is a temporary measure until the conflict in Iraq is over and normal operations resume.
Lufthansa said it made intensive preparations in the event of a military conflict in Iraq and that it has been working on various possible scenarios.
Some carriers such as British Airways have suspended service to Kuwait and Tel Aviv due to the conflict. Cathay Pacific Airways, on the other hand, said that all of its passenger and freighter flights are operating as scheduled.
The war has apparently had little impact on bookings, at least for U.S. carriers. Richard Lung, director of cargo revenue management for United Airlines, said he was not aware of any shipments being canceled. United, like other carriers, has canceled flights because of the drop-off in passenger travel due to the war. Lung said that could cause some tightening of freight rates.