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CAB issues fuel surcharge matrix

BusinessWorld logo BusinessWorld 9/11/2018
a plane flying in the air: CAB issues fuel surcharge matrix © Provided by Businessworld CAB issues fuel surcharge matrix a plane flying in the air: CAB issues fuel surcharge matrix © Provided by Businessworld CAB issues fuel surcharge matrix

By Denise A. Valdez

THE GOVERNMENT is allowing airlines to impose a fuel surcharge on passengers, as jet fuel prices continue to rise and the peso further weakens against the US dollar.

Under Resolution No. 44 dated Aug. 17, the Civil Aeronautics Board (CAB) issued a fuel surcharge matrix and guidelines for imposition of the fuel surcharge for domestic and international flights. It was published in a leading newspaper on Aug. 30, and is expected to take effect on Sept. 14.

“As airlines are now a primary mover of trade and transport, a matrix of fuel surcharge shall allow them to thrive and be more competitive in the global market,” the CAB said in the resolution.

Airline fuel surcharge is defined as “an optional fee, imposed and collected by airlines to recover fuel costs and stem losses caused by an upward spike in fuel cost.” It can be reduced or removed depending on the price of jet fuel.

The CAB said it will evaluate the fuel surcharge every two months, while the matrix will be issued every 12 months.

“The applicable fuel surcharge will be determined based on the 2-month average of jet fuel MOPS (Mean of Platts Singapore) prices in its peso per liter equivalent, and will be fixed for two months. This shall be the ceiling rate for fuel surcharge,” the resolution stated.

Once the average price of jet fuel per liter during the two-month period falls below P21, airlines will not be allowed to collect a fuel surcharge.

Under the fuel surcharge matrix for domestic flights, passengers will have to pay between P34 to P769, depending on the distance and the rise in jet fuel prices (starting from P22 per liter through P42 per liter).

A passenger going from Manila to Caticlan or Kalibo will have to pay P68 in fuel surcharge if the fuel price is more than P21 but less than P24 per liter. This will go up to P328 if the jet fuel price hits P39 but less than P42 per liter.

Using the same matrix, a passenger from Clark to Davao will pay between P132 to P769.

For international flights originating from the Philippines, the range of fuel surcharge to be imposed is between P163 to P9,860. The fee will depend on the distance of the flight and jet fuel price increases.

A passenger going to Hong Kong, Taiwan, Vietnam, Cambodia and Brunei will pay a fuel surcharge of P163 if the average price of jet fuel per liter is more than P21 but less than P24 per liter. It will rise to as much as P1,035 if jet fuel prices hit P39 up to less than P42 per liter.

On the other hand, a passenger heading to North America and United Kingdom will shell out between P1,557 to P9,860 for fuel surcharge, depending on the rise in jet fuel costs.

Transportation Undersecretary for Aviation Manuel Antonio L. Tamayo told reporters last week it was important to allow airlines to recover the costs of higher jet fuel prices.

“We have to let the airlines survive instead of cancelling flights, sacrificing quality of service,” he said.

According to the International Air Transport Association (IATA), the price of jet fuel surged to $92.4 per barrel as of Aug. 31, 24.5% higher from the same period last year.

Philippine Airlines, Cebu Pacific, CebGo and Philippines AirAsia earlier filed separate fuel surcharge petitions with the CAB.

Under the resolution, the CAB said airlines will have to secure government approval before imposing the fuel surcharge on passengers.

“Government approvals shall be secured by the airline prior to any imposition, collection or implementation of fuel surcharge or change thereof, and shall strictly conform to the applicable prevailing rates as determined by CAB,” it said.

In a text message, PAL Corporate Communications Vice President Jose E. L. Perez de Tagle said the flag carrier has yet to file a new application that takes into account the fuel surcharge matrix.

“We are waiting for the final details from CAB before airlines can file applications under the new matrix; we will decide based on that,” he said.

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