Advertisement

CAB expects airline surcharges to fall amid declining jet fuel prices

Font Size

Philippines Airlines (PAL)

THE Civil Aeronautics Board (CAB) expects the fuel surcharge collected by airlines to drop ahead of the travel-heavy dry season as the price of jet fuel continues to decline on world markets.

CAB Executive Director Carmelo L. Arcilla told reporters on Thursday while the final fuel surcharge will be announced on Feb. 15, the agency expects to reduce it to Level 2 for the months of March and April.

“Right now, we reduced from Level 4 to Level 3. We hope it will continue to (fall) because in general fuel prices are going down. Although they are still volatile — sometimes it will spike up — the general trend is going down,” Mr. Arcilla said in a chance interview on Thursday.

In December, the CAB announced a decrease in fuel surcharge for January and February to Level 3, or an additional P74-P291 for domestic flights and P381-P3,632 for international flights, depending on distance.

The price of jet fuel according to the International Air Transport Association (IATA) dropped 9.7% to $76.80 per barrel as of Jan. 25. At an exchange rate of P52.13 to the dollar, this amounts to P4,003.20 per barrel, or P25 per liter.

The approved CAB passenger fuel surcharge matrix allows a Level 2 implementation when the price of jet fuel is between P24 and P27 per liter, and Level 1 when it falls to between P21 and P24 per liter.




Once the price of jet fuel drops to P21 per liter and below, surcharges are cancelled.

Currently, Philippines Airlines and Cebu Pacific are collecting a Level 3 surcharge, which started in September. Both airlines recorded losses in the third quarter and aim to recoup expenses via the surcharge. — Denise A. Valdez









Advertisement