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Business

Fuel surcharge policy under review – CAB

Richmond Mercurio - The Philippine Star

MANILA, Philippines — The Civil Aeronautics Board (CAB) is reviewing its policy on passenger fuel surcharge for domestic and international flights.

The CAB, in its latest advisory, said the passenger fuel surcharge for domestic and international flights is currently pending review and evaluation.

CAB executive director Carmelo Arcilla declined to comment on the reason why the policy is being reviewed or if there would be adjustments made in the fuel surcharge matrix following the evaluation, saying that it is currently under study by the board.

Due to the pending review and evaluation, the CAB said the current passenger fuel surcharge, which is at Level 4, would be maintained for the month of May.

The effectivity period of the applicable fuel surcharge is usually fixed for a two-month period, but it has been limited to only a month this time.

Under Level 4 of the fuel surcharge matrix, airlines are allowed to collect an increase of P108 to P411 per passenger for domestic flights, and from P543 to P5,189 for international flights.

Airline fuel surcharge is an optional fee that is imposed and collected by airlines to recover costs and stem losses resulting from rising fuel prices.

Transportation Secretary Arthur Tugade, in an interview last month, said he is against the imposition of higher fuel surcharge for the meantime as this would result in higher air fares.

“You know, fuel surcharge, as much as possible, let’s move away from that because if you impose fuel surcharge that would be passed on to passengers, then the cost of travel will increase,” Tugade said.

“For me, my position is to maintain your cost of travel at a minimum. Do not increase yet,” he said.

The CAB in 2015 lifted the authority of domestic and foreign airlines to impose fuel surcharge on domestic and international flights, but decided to allow its imposition three years after or in 2018, given the continued escalation of fuel prices in the global market and the foreign exchange rate then.

Alongside its return was the creation and issuance of a fuel surcharge matrix which determines the applicable fuel surcharge 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.

Local and foreign airlines 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 carrier

CIVIL AERONAUTICS BOARD

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