Airlines cutting fuel surcharges as crude oil prices fall

Some Canadian airlines are scaling back fuel surcharges as crude oil prices fall following the U.S. and Iran's framework agreement to end a war that has disrupted Middle Eastern shipping since late February.

WestJet Airlines has reduced its levy on companion vouchers to $40 from $60 per round trip or one-way fare. Porter Airlines cut the fuel surcharge for new reward flight bookings by half to $20 and said it will make further adjustments as conditions change.

Air Canada is managing fuel costs through its regular fare structure, though a surcharge remains in effect on ground packages offered through its vacations business. Flair Airlines is making no changes but says it is monitoring the situation and will adjust prices "as appropriate."

Crude oil prices have fallen back to around the U.S.$70 per barrel mark since the framework agreement, close to where prices stood before the war began. Tanker traffic through the Strait of Hormuz—a vital waterway through which one fifth of the world's crude supply moves—had been nearly cut off at some points this spring, pushing crude well above U.S.$100 per barrel.

Spot rates for aviation fuel have started to decrease even amid ongoing uncertainty over safe passage through the Persian Gulf. The average price of jet fuel in North America dropped 23 per cent last week versus a month earlier, according to the International Air Transport Association. However, prices remain nearly a third higher than a year ago.