No air fare hike in next 2 months — Civil Aeronautics Board

MANILA, Philippines — Air fares will not increase anytime soon amid the recent spike in jet fuel prices as the applicable fuel surcharge level allowed to be imposed by airlines will stay the same in the next two months, according to the Civil Aeronautics Board.

CAB executive director Carmelo Arcilla told The STAR passenger fuel surcharge for domestic and international flights from May 1 to June 30 would remain at Level 2.

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

“Based on our evaluation, jet fuel price for the months of February to March averaged $80.01 and dollar exchange at P52.30, which is equivalent to P26.32 per liter,” Arcilla said.

“This is a bit higher than the previous two month average, but the amount still falls under Level 2,” he added.

For the existing March to April period, the CAB earlier announced that passenger fuel surcharge for domestic and international flights would go down to Level 2 from Level 3 during the January to February period.

The decline during the March to April period was because average aviation fuel prices for the months of December 2018 to January 2019 went down to $73.50 per barrel, which is equivalent to P24.32 per liter.

Arcilla said jet fuel price and the peso-US dollar exchange rate, the two factors that affect passenger fuel surcharge, have been very volatile in the February to March monitoring period.

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

Both local and foreign 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 in September last year decided to allow the reimposition of fuel surcharge on the back of soaring fuel prices.

The agency has adopted a matrix for fuel surcharge that will be 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. Should the two-month price average of jet fuel per liter falls below P21, then no fuel surcharge will be collected.