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CAB approves higher air passenger fuel surcharge

Image by TuendeBede from Pixabay

Airlines operating in the Philippines may collect higher passenger fuel surcharge rates in July and August 2019 due to the higher price of jet fuel.

In an advisory dated June 15, Civil Aeronautics Board (CAB) executive director Carmelo Arcilla said that from April to May 2019, jet fuel averaged US$82.96 per barrel, equivalent to P27.24 per liter at an exchange rate of P52.19. This is an increase from the $80.01 per barrel, equivalent to P26.32 per liter at an exchange rate of P52.30 per dollar, in February to March 2019.

The higher price falls within Level 3 on the passenger fuel surcharge matrix for domestic and international flights released by CAB last September 10 through CAB Resolution No. 44.

Level 3 rates range from P74 to P291 per passenger (one way) on a domestic flight and from P381 to P3,632 per passenger (one way) on an international flight.

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. This 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.

Under the timetable, the announcement for the July-August fuel surcharge falls on June 15, with the evaluation period from April to May 2019.

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 May and June 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 equivalent currency, the applicable conversion rate for the period is $1 is to P52.19.

CAB said the application form for the authority to impose fuel surcharge can be downloaded from its website.

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

Resolution 44 notes that airline fuel surcharge is an optional fee that airlines can 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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