No hike in air fares for Jan-Feb 2020

MANILA, Philippines — No hike in air fares is seen for the first two months of 2020 as fuel surcharge level for the said period would remain at current level.

In its latest advisory, the Civil Aeronautics Board (CAB) said passenger fuel surcharge for domestic and international flights from Jan. 1 to Feb 29, 2020 would stay at Level 2, which is the same for the current November to December period.

The applicable fuel surcharge level for the first two months of next year was derived from the average price of jet fuel during the two-month evaluation period covering October and November.

“For October to November 2019, the price of jet fuel averaged $77.28 per barrel, with the US dollar exchange rate of 51.12 for the same period. This is equivalent to P24.85 per liter, which corresponds to Level 2 of the passenger fuel surcharge matrix,” the CAB said.

Under the Level 2 of the passenger fuel surcharge matrix, airlines are allowed to impose an increase of P45 to P171 for domestic flights, and P218 to P2,076 for international flights.

The applicable fuel surcharge level has stayed at Level 2 since September, after being at Level 3 during the July to August period this year. 

The CAB said airlines that wish to impose or collect fuel surcharge for the January to February period must file their application on or before the beginning of the effectivity period, with fuel surcharge rates not exceeding the stated level.

Local and foreign airlines may be are allowed to collect fuel surcharge rates that are lower than the stated level for the given two-month period, if they choose to do so depending on how they want to compete with other carriers.

Fuel surcharge is a way in which airlines can partially recover losses from increasing fuel prices and the weakening of the peso over the dollar.  Fuel cost accounts for over 50 percent of the total operating costs of airlines.

In September 2018, the CAB decided to allow the reimposition of fuel surcharge on the back of soaring fuel prices and adopted a matrix for fuel surcharge that is determined based on the two-month average of jet fuel MOPS (Mean of Platts Singapore) prices in its peso per liter equivalent and will be fixed for two months.