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Airline fuel surcharge remains steady

passenger fuel surcharge
Image by winterseitler from Pixabay

The passenger fuel surcharge that airlines operating in the Philippines may collect from January to February 2020 will not change due to the steady average price of jet fuel, according to the Civil Aeronautics Board (CAB).

In an advisory dated December 16, CAB executive director Carmelo Arcilla said that from October to November 2019, jet fuel averaged US$77.28 per barrel, equivalent to P24.85 per liter at an exchange rate of P51.12 per dollar. This average is almost the same as the $77.07 per barrel, equivalent to P25.30 per liter at an exchange rate of P52.19 per dollar, during the period August to September 2019.

The latest rate falls within Level 2 of the passenger fuel surcharge matrix for domestic and international flights, which was released through CAB Resolution No. 44 in September 2018.

Level 2 rates range from P45 to P171 per passenger on a domestic flight (one way) and from P218 to P2,076 per passenger on an international flight (one way).

Resolution No. 44, which reimposes the collection of fuel surcharge from passengers on domestic and international flights, states that the applicable fuel surcharge shall be determined based on the two-month average of jet fuel Mean of Platts Singapore (the average of a set of Singapore-based oil product price assessments published by Platts) priced in its peso-per-liter equivalent, and will be fixed for two months.

The two-month price average shall be the ceiling rate for the fuel surcharge.

The applicable fuel surcharge shall be evaluated every two months and announced 15 days prior to its effectivity, in accordance with the timetable under Resolution No. 44.

If the two-month price average of jet fuel per liter falls below P21, no fuel surcharge will be collected.

Airlines wishing to impose or collect fuel surcharge for January to February 2020 must file their application with CAB on or before the effectivity period, with fuel surcharge rates not exceeding the stated level. For fuel surcharge to be collected in the equivalent currency, the applicable conversion rate for the period is $1 is to P51.12.

CAB approved the reimposition of fuel surcharges last year following increases in the prices of fuel.

Resolution 44 notes that airline fuel surcharge is an optional fee that airlines may impose and collect to recover fuel costs and stem losses caused by a spike in fuel cost.

“Fuel surcharge is not a part of the basic airfare and may be reduced or removed depending on the price of jet fuel in the market, in accordance with prevailing international practice,” the resolution adds.

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