Cheaper air fares for Sept as CAB cuts fuel surcharge

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Cheaper air fares for Sept as CAB cuts fuel surcharge
Photo by Meghna R on Unsplash
  • The Civil Aeronautics Board has reduced the passenger and cargo fuel surcharge that airlines may impose for September 2022 as jet fuel prices declined
  • From Level 12 rates in August, the Sept fuel surcharge airlines may impose has been adjusted to Level 9 for September 1 to 30
  • For fuel surcharge to be collected in the equivalent currency, the applicable conversion rate for the period is $1 is to P55.93

Cheaper air fares may be expected in September as the Civil Aeronautics Board (CAB) cut the passenger and cargo fuel surcharge airlines may impose for the month due to declining jet fuel prices.

From Level 12 rates in August, the CAB adjusted to Level 9 the surcharges airlines may impose from September 1 to 30.

In an advisory dated August 15, CAB executive director Carmelo Arcilla said that from July 10 to August 9, the price of jet fuel averaged P46.73 per liter, which corresponds to Level 9 of the passenger and cargo fuel surcharge matrix for domestic and international flights under CAB Resolution No. 25.

Level 9 rates for passengers range from P287 to P839 per one-way domestic flight, and P947.39 to P7,044.27 for a one-way international flight.

The Sept fuel surcharge for cargoes under Level 9 ranges from P1.47 to P4.31 per kilogram (kg) on a one-way domestic flight, and P4.87 to P36.21 per kg on a one-way international flight.

Airlines wishing to impose or collect the Sept fuel surcharge 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 P55.93.

CAB last May adopted CAB Resolution No. 25, which provides the revised policy on fuel surcharges, which now includes a matrix for cargo.

Resolution No. 25 revises Resolution No. 46 (passenger fuel surcharge for domestic and international flights adopted in June 2021), which was reviewed and evaluated by CAB this year in light of the continuous escalation of jet fuel prices in the global market, and the foreign exchange rate.

CAB said the review showed fuel surcharges was made only applicable to passengers, which is one component in a combination service (passenger and cargo operations).

Resolution No. 25 said a cargo fuel surcharge matrix may be provided given that the volatility of jet fuel prices also affects cargo operations as a component of combination service wherein cargo is carried in the belly-hold capacity of a passenger aircraft.

Under the new policy, the applicable fuel surcharge will be determined based on a one-month average of jet fuel Mean of Platts Singapore prices in its peso per liter equivalent, and will be fixed for immediately succeeding month. This will be the ceiling rate for fuel surcharge.

The applicable fuel surcharge will be evaluated every month and will be announced 15 days prior to its effectivity. Previously, the applicable fuel surcharge was determined based on a two-month average and implemented for two months.

Resolution No. 25 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 said.

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

The passenger fuel surcharge level in effect on the day of ticketing should be applied, and should be the same for all passengers, excepts infants without seats. The applicable surcharge should be collected per passenger and per segment.

For cargoes, the fuel surcharge should be applicable only for cargo carried in the cargo hold of an aircraft used for combination services. Such cargo must be covered by an airway bill.

Cargo fuel surcharge should be collected based on the actual weight (as opposed to chargeable weight) carried per segment. Cargo fuel surcharge should not be levied on a passenger’s check-in baggage.

For international flights originating from the Philippines, the fuel surcharge may be imposed in any equivalent foreign currency. – Roumina Pablo