Higher airfare looms as jet fuel prices soar

MANILA, Philippines — The Civil Aeronautics Board (CAB) has revised the country’s passenger fuel surcharge matrix and has introduced a fuel surcharge matrix for cargo following an evaluation in light of the continuous escalation of jet fuel prices in the global market.

The CAB board, under Resolution No. 25, resolved to adopt new guidelines on passenger, as well as cargo fuel surcharge for domestic and international flights.

The CAB said a review of its earlier resolution showed that fuel surcharge was made only applicable to passengers, which is one component in a combination of service that involves passenger and cargo operations.

Under the new guidelines, a cargo fuel surcharge has been provided with the CAB saying that the volatility of jet fuel prices also affect cargo operations as a component of combination service wherein cargo is carried in the belly-hold capacity of a passenger aircraft.

The CAB said the cargo fuel surcharge shall be applicable only for cargo carried in the cargo hold in an aircraft used for combination services.

Such cargo must be covered by an airway bill, it said.

The CAB said the cargo fuel surcharge should be collected based on the actual weight carried per segment, and it shall not be levied against a passenger’s check-in baggage.

The cargo fuel surcharge matrix issued by the CAB has up to 20 levels for both domestic and international flights, with the rates amounting to as low as P0.19 per kilogram to as high as P9.94 per kg for domestic flights.

For international flights originating from the Philippines, the rates ranges from as low as P0.64 per kg to a high of P83.45 per kg, depending on the applicable fuel surcharge level for the given period.

The CAB, meanwhile, has expanded passenger fuel surcharge matrix to up to Level 20 from the previous maximum Level 7.

Rates for the new passenger fuel surcharge matrix range from as low as P37 to as high as P1,933 for domestic flights, and a low of P123.57 to a high of P16,232.44 for international flights.

The CAB said the passenger fuel surcharge level in effect on the day of ticketing will be applied and should be the same for all passengers – adults, children and infants occupying seats.

It said the applicable fuel surcharge shall be collected per passenger, per segment.

The applicable fuel surcharge will be determined based on a one-month average of jet fuel MOPS  (Mean of Platts Singapore) prices in its peso per liter equivalent, and will be fixed for immediately succeeding month.

For next month, the CAB, in an advisory, said passenger and cargo fuel surcharge for domestic and international flights would increase to Level 11 from Level 7 this month.

“For May 10 to June 9, 2022, the price of jet fuel averaged P53.49 per liter, which corresponds to Level 11 of the passenger and cargo fuel surcharge matrix,” the CAB said.

Under the Level 11 of the new passenger fuel surcharge matrix, airlines are allowed to collect an increase from P355 to P1,038 per passenger for domestic flights, and from P1,172.07 to P8,714.84 for international flights.

As for the cargo fuel surcharge matrix, Level 11 is equivalent from P1.82 to P5.34 per kg for domestic flights, and from P6.03 to P44.80 per kg for international flights.

Airlines are allowed to collect fuel surcharge rates that are lower than the stated level if they choose to do so depending on how they want to compete with other carriers.

The CAB said airline fuel surcharge is an optional fee, imposed and collected by airlines to recover fuel costs and stem losses caused by upward spikes in fuel cost.

It said fuel surcharge is not a part of the basic airfare and maybe reduced or removed depending on the price of jet fuel in the market.