Return of fuel surcharge deemed temporary relief

CEBU, Philippines —  The reimposition of fuel surcharge in airline fares is just a "temporary relief" for airline companies amid the rising aviation fuel costs, said an official from budget carrier Cebu Pacific.

In a recent interview, Charo Lagamon, the company's corporate communications director, said it was practical for air carriers to ask the Civil Aeronautics Board (CAB) to reimpose the fuel surcharge due to rising fuel prices in the world market.

Lagamon also cited the continued weakening of the peso against the dollar as one of the factors that's increasing airlines' operational costs.

She explained airline companies usually transact in dollars when it comes to acquiring aircraft and buying fuel.

With the weak peso, this means that airlines have to spend more in buying fuel, she said.

In fact, higher fuel costs and a weaker peso already cut into Cebu Pacific's profits last year, pulling net income down 19 percent despite a 10 percent increase in revenues.

Moreover, the official noted the fuel surcharge is just a temporary relief for airlines and that this could eventually be removed again if fuel prices would decrease again.

The government earlier approved a fare matrix that includes fuel surcharges for local airlines.

Despite this, Cebu’s airport operator, GMR-Megawide Cebu Airport Corp, sees the travel demand to continue.

"Historically, airlines have added fuel surcharges to ticket charges and that has not in itself reduced demand as the passengers' reasons for travel still prevailed,"  Andrew Harrison, chief executive advisor, earlier told The FREEMAN.

"We, therefore, do not envisage a reduction in air travel demand on account of the addition of fuel surcharges," the airport official pointed out.

Aviation fuel prices had reached $2.21 per gallon last Sept. 4, according to the US Energy Information Administration. That is up by 14.7-percent.

The CAB had lifted the surcharges in 2015 when global fuel prices were falling.

Prior to that local airlines had been collecting fuel surcharges since 2012, which ranged from P200 to P500 for domestic flights and from $20 to $300 for international flights.