Fuel surcharge up CAB: Air fare hike looms

CEBU, Philippines — Air fares are likely to increase next month as the fuel surcharge matrix goes up from level 2 to level 3, this according to the latest advisory issued by the Civil Aeronautics Board (CAB).

CAB announced that from level 2 in May-June period, the passenger fuel surcharge for domestic and international flights will be at level 3 by July 1 to August 31. 

In a report from Philstar.com, CAB said: “For April to May 2019, the price of jet fuel averaged $82.96 per barrel, with the US dollar exchange rate of 52.19 for the same period. This is equivalent to P27.24 per liter, which corresponds to level 3 of the passenger fuel surcharge matrix.”

CAB said that following the adjustment, airlines are allowed to increase fuel surcharge from P74 to P291 for domestic passengers, and P381 to P3,632 for international passengers, which is aligned with fuel surcharge matrix level 3.

However, Cebu Pacific corporate communications director Charo Logarta-Lagamon said they will still have to check the impact of the adjustment to their airfares.

She said that “fuel surcharge is an add-on to the base fare, which won’t increase. CEB has several fare classes or buckets from promotions as low as P1.”

Lagamon further added that “the net effect on total fare would be mitigated as we try to temper the impact of fuel prices.”

Before airlines can impose an increase based on the new fuel surcharge matrix for July to August, CAB said the air carriers must file an application on or before the beginning of the effectivity period.

For passenger fuel surcharges, CAB has adopted a matrix based on a two-month average price of jet fuel according to the Mean of Platts Singapore (MOPS).

From level 4 at the latter part of 2018, CAB slashed the allowable fuel surcharge level for January to February to level 3 as prices of jet fuel dropped.

It dropped further by March to April period resulting to an adjustment in the fuel surcharge matrix from level 3 to level 2.

Airline fuel surcharge is an optional fee imposed and collected by airlines to recover fuels costs and stem losses caused by fuel cost spikes and the weakening of the peso-dollar exchange. If the two-month price average of jet fuel per liter falls below P21, no fuel surcharge will be collected.