Fuel surcharge to remain until prices stabilize – CAB

MANILA, Philippines – Airline tickets may increase by at least P80 following the government decision to allow local carriers to impose fuel surcharge once again on the back of skyrocketing fuel costs.

Civil Aeronautics Board (CAB) executive director Carmelo Arcilla during a Senate hearing yesterday said the agency would keep allowing local airlines to impose fuel surcharge until the price of aviation fuel returns back to $70 per barrel.

Arcilla said the price of aviation fuel has been surging upward in recent months and is now hitting $90 per barrel, prompting airlines to apply for the imposition of a fuel surcharge.

“We removed fuel surcharge when fuel went down to $67 per barrel. Now it’s $90 per barrel for aviation fuel,” he said.

The CAB in 2015 published Resolution 79, lifting the authority of domestic and foreign airlines to impose fuel surcharge on domestic and international flights. 

“It would be suspended once the price of aviation fuel goes down from the current $90 per barrel to a threshold $70 per barrel. We will remove the fuel surcharge by then,” Arcilla said.

The rule is in line with a resolution approving the requests of airlines to bring back the fuel surcharge and implement a surcharge matrix.

Arcilla said the matrix is created to protect the passengers.

“We created a matrix so as not to make arbitrary the increase in surcharge and if ever it goes down. It will automatically go down in accordance with the prevailing MOPS or Mean of Platts Singapore,” he said.

According to Arcilla, the matrix outlines different categories of fuel surcharge amount depending on the flight distance.

He said the nearest, or not more than 200 kilometers (km), would entail about between P80 and P100 surcharge per flight.

Arcilla said other brackets include 200 km to 400 km, up to 600 km, and for the long haul. The official, however, did not specify rates for the said categories.

“As far as fuel surcharge is concern, it has been studied carefully. There were hearings with airlines. We got their inputs and it was studied by CAB,” Transportation Undersecretary for aviation Manuel Tamayo said.

“We studied what was being implemented in other countries and what was given to us by airlines. As far as the DOTr is concerned, we allowed the CAB board to approve the imposition of the fuel surcharge,” he said.