You will soon be shelling out more to fly with Cathay Pacific.

Cathay chairman Christopher Pratt said yesterday it is "inevitable" that ticket prices will increase, after the company's fuel costs soared 83 percent in the first half of the year to HK$19.31 billion and led the carrier to post an interim loss.

"Passengers have to pay for what it costs to transport them," Cathay chief operating officer John Slosar said.

Fuel surcharge hikes approved by the Civil Aviation Department in the first half of the year could not even cover half the increase in fuel costs, Cathay said.

Fares in all classes "must be reevaluated," chief executive Tony Tyler said.

Hong Kong's flag carrier previously only raised ticket prices for first- and business-class passengers. "All airlines need to buy fuel, and [ticket] prices must adjust to face reality."

Demand and forward bookings remain strong, but "some thinning" of demand can be expected as ticket prices rise.

Cathay said yesterday it swung to a first-half net loss of HK$663 million from a net profit of HK$2.58 billion in the first half last year.

If a HK$468 million provision Cathay booked for a fine it will pay for violating US antitrust laws is stripped out, the loss narrows to HK$195 million.

The results were worse than the most pessimistic predictions and far below analysts' median forecast of a HK$1.03 billion profit for the period, according to a survey of three analysts by Bloomberg.

Pratt said the global aviation industry is making a painful adjustment to the new reality of oil over US$100 (HK$780) a barrel. Fuel accounted for 45 percent of Cathay's operating costs in the first half, up from 34 percent in the first half of last year.

The industry will not survive in its current form, Pratt said.

"Cathay Pacific is reducing costs where it can, but there is a limit to how much cost can be saved before quality and brand are compromised," he said.

The airline slashed its dividend by 88 percent to 3 HK cents per share, down from 25 HK cents for the same period last year.

Since January, Cathay has already hiked fuel surcharges for short-haul flights by 104 percent to HK$231, from HK$113. It has also raised fuel surcharges for long-haul flights by 98 percent to HK$924, from HK$466.

Right now Cathay can face a time lag of up to five months between when fuel prices rise and when it can get new fuel surcharges implemented, Nomura analyst Jim Wong said.

Pratt is pushing for the government to be more efficient in approving the fuel surcharge increases, he said.

"The time lag on the surcharges was one large reason they actually posted a loss," Wong said.

To help ease the pain, Cathay will be restructuring its network, including a reduction of capacity on routes to North America.

It will also add capacity to faster growing, more profitable markets such as Australia and the Middle East.

"There will be some redeployment ... but it is not envisaged that the company will withdraw from any destination it now serves," Pratt said.