Austrian Airlines (AUA) has decided to jack up ticket prices – only two months after the most recent increase.
The struggling carrier, which suffered a loss of 65 million Euros in each of the past two years, said yesterday (Weds) its kerosene surcharge would increase as of next Tuesday (28 February). The airline explained that the charge for flights to destinations in the United States would soar by 12 Euros to 132 Euros while tickets for connections to the Middle East and airports in Europe would become four Euros more expensive.
AUA did not argue the decision but the step is seen as only the first of several measures as part of the planned cost reduction presented by new CEO Jaan Albrecht last month. The most recent AUA ticket price hike occurred last December. At that time, the carrier made aware of rising kerosene prices, new taxes on tickets in Austria and Germany, European carbon emission fees and a worsening of the economic environment.
AUA recorded 737,400 passengers last month, 7.1 per cent more than in January 2011. The Viennese carrier counted 11.26 million passengers between January and December 2011. This was an increase of 3.4 per cent compared to the previous year. Albrecht is nevertheless determined to keep checking where savings can be made. He said it was not acceptable that personnel costs had been unchanged for three years despite declining workforce levels.
Pilots threatened to organise strikes last week when the AUA board decided to cancel their contracts. AUA’s 2,100 pilots and cabin crew were not laid off but asked to accept working under new contracts which meant lower incomes. Reports have it that the AUA board wants pilots to work more for less in the coming years. Bosses of the carrier said the plan was to make staff’s contracts and agreements between employees and the board “more flexible”.
Unionists were alarmed by the announcements but business newspapers recently reported that they decided to scrap plans for a strike in the near future and return to the negotiating table instead. Employees’ representatives said pilots, cabin crew and ground personnel had been seriously affected by several austerity measures in the past years. They warned from carrying out further cutbacks of the workforce level or salaries.
AUA was taken over by Lufthansa in September 2009 after talks with several other European airlines failed to lead to an agreement. The German carrier wants AUA to achieve profits from this year. Aviation experts think that Lufthansa is ready to reduce the number of AUA flights dramatically if the airline fails to manage a turnaround within 2012. A sale is not planned, according to sources close to the Lufthansa board but Austrian unionists criticise the rising pressure by Lufthansa bosses.
The agreement between Lufthansa and the Austrian Industry-Holding Stock Corporation (ÖIAG) about an acquisition was reached only after the Austrian government of Social Democrats (SPÖ) and People’s Party (ÖVP) decided to inject 500 million Euros into the ailing airline. The provision with fresh capital occurred shortly before the deal was finalised – and tempted FlyNiki founder Niki Lauda and other competitors of AUA and Lufthansa to complain about a possible breach of competition regulations.
Lauda also found harsh words for AUA’s decision to ask the Austrian Constitutional Court (VfGH) to investigate whether the Austrian traffic ministry was right to keep AUA from operating more often between Vienna International Airport (VIA or VIE) and Ben Gurion International Airport (TLV) in Tel Aviv, Israel. Lauda said this was an unprecedented step. He claimed it had never happened before that a carrier based in Austria filed a lawsuit against the federal traffic ministry.
The VfGH has not yet issued a verdict. The traffic ministry decided to reject AUA’s appeal to increase its activity between VIA and TLV by pointing out that the airline was already operating on the connection. Lauda claimed that AUA’s attempts to lower FlyNiki’s market share were doomed to fail because of the formerly state-owned carrier’s costly fleet and high personnel expenses.