Fuel surcharge stays at year high in June

MANILA, Philippines — The government is retaining the fuel surcharge passed on to travelers at a year-high level even as demand for flights is about to go up with the school year ending.

In an advisory, the Civil Aeronautics Board (CAB) said the fuel surcharge will remain at Level 6 for the fourth consecutive month in June, when airlines expect flight demand to start going up as students go on academic break.

CAB decided to keep the pass-on rate the same even though prices of jet fuel went down in May based on the monitor of the International Air Transport Association (IATA).

Prices of jet fuel have declined by 7.1 percent to $100.57 per barrel as of May 17, from a month ago. In Asia and Oceania, prices have dipped to $96.01 a barrel during the period.

At Level 6, airlines may slap a fuel surcharge of P185 to P665 for domestic flights. Meanwhile, they may collect a minimum of P610.37 to a maximum of P4,538.4 for international trips.

As mandated, carriers wishing to impose the fuel surcharge have to file an application with CAB before June.

CAB told airlines transacting in foreign currency to observe an exchange rate of P57.26 to $1 when computing the fuel surcharge.

Operators, including flag carrier Philippine Airlines (PAL), expect flight demand to surge by the end of the second quarter until the middle of the third quarter.

PAL president and chief operating officer Stanley Ng said the airline is preparing for an increase in flight demand as soon as the school year ends in June. He noted that last year, PAL received its highest bookings in July and August.

“I expect July and August to be our strongest months. Last year I think that was the strongest, the third quarter, so this year might be the same trend,” Ng said.

For 2024, IATA expects prices of jet fuel to average $113.8 per barrel, translating to a global bill of $281 billion and amounting to 31 percent of airline expenses.

Before the start of the year, IATA warned airlines that prices of jet fuel could remain high, as the world deals with supply chain disruptions due to geopolitical conflicts in Europe and the Middle East.