Higher fuel surcharge in March to bump up airfares

• The Civil Aeronautics Board has upgraded to Level 7 the passenger and air cargo fuel surcharge that airlines may impose for March 2023

• Under CAB Resolution No. 25, Level 7 rates for passengers range from P219 to P739 per one-way domestic flight, and P722.71 to P5,373.69 one-way international flight

• For cargoes, Level 7 rates range from P1.12 to P3.29 per kilogram (kg) on a one-way domestic flight, and from P3.72 to P27.62 per kg on a one-way international flight

The higher fuel surcharge in March set by the Civil Aeronautics Board (CAB) will likely bump up airfares.

CAB has upgraded to Level 7 the passenger and air cargo fuel surcharge that airlines may impose for March 2023.

In an advisory dated February 21, CAB executive director Carmelo Arcilla said the fuel surcharge for March 1-31 is set at Level 7 of the fuel surcharge matrix provided under CAB Resolution No. 25. This is one tier higher than the Level 6 rates imposed just this February.

Under CAB Resolution No. 25, Level 7 rates for passengers range from P219 to P739 per one-way domestic flight, and P722.71 to P5,373.69 one-way international flight.

For cargo, Level 7 rates range from P1.12 to P3.29 per kilogram (kg) on a one-way domestic flight, and from P3.72 to P27.62 per kg on a one-way international flight.

Airlines wishing to impose or collect fuel surcharge for March must file its 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 set at P54.63 per US$1.

CAB in May 2022 adopted CAB Resolution No. 25, which provides the revised policy on fuel surcharges, which now includes a matrix for cargo. The fuel surcharge matrix ranges from Level 0 to 20.

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 applicable only to passengers. Resolution No. 25 provides for a cargo fuel surcharge matrix considering the continued volatility of jet fuel prices.

Under the 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 the immediate succeeding month. It will serve as the ceiling rate for fuel surcharge.

The applicable fuel surcharge will be evaluated every month and 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.

The CAB order also emphasized at if the one-month price average of jet fuel falls below P21 per liter, no fuel surcharge will be collected.

The passenger fuel surcharge level in effect on the day of ticketing is applied for all passengers, excepts infants. The applicable rate must per passenger and per flight segment.

For cargoes, the fuel surcharge should be applicable only for cargo carried in the hold of an aircraft used for combination services. The surcharge will be based on the actual weight carried per segment. Cargo fuel surcharge are not 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