Airlines and companies using fuel surcharges to cover surge in costs, UK survey shows

Airlines and other companies are increasingly using fuel surcharges to cover soaring costs, a survey has found, in a further sign of Iran war-linked inflation hitting the economy.

A poll of companies in the services sector, which includes airlines, found rising fuel prices had contributed to businesses raising prices at the fastest pace in more than three years in April.

Nearly six in 10 firms surveyed by S&P Global said average costs rose last month, mostly driven by fuel and higher wages, but also in part by metals and plastics getting more expensive.

IAG, the conglomerate that owns British Airways, Iberia, Aer Lingus and Vueling, said last month it would make “some pricing adjustments to reflect these higher fuel costs”, although it stopped short of labelling the move as a surcharge.

Meanwhile, Virgin Atlantic has added a charge of £360 to business class tickets, falling to £50 for economy. Its new chief executive, Corneel Koster, told the Financial Times in April that it would still be “hard to make a profit this year”.

Tim Moore, S&P Global’s economics director, said the rise in costs was “overwhelmingly linked to greater transportation bills and increased salary payments”.

“A number of firms also noted that they had brought in fuel surcharges for their customers, which led to a spike in prices-charged inflation across the service economy to its highest for over three years in April.”

Despite this, firms reported slightly better business than expected last month, with the pollster’s gauge of activity rising to 52.7 across the sector, up from an 11-month low of 50.5 in March.

A tanker anchored in the strait of Hormuz. A blockade of the strait has choked off 20% of the world’s oil supplies. Photograph: Amirhossein Khorgooei/ISNA/AFP/Getty Images