Airlines seek government help amid soaring fuel prices

MANILA, Philippines — Local airlines are seeking assistance from the government in the form of reduction or non-increase of government-imposed fees and charges to mitigate the impact of rising fuel prices.

Air Carriers Association of the Philippines (ACAP) chairman Bonifacio Sam said the increase in the prices of oil has affected the aviation industry.

“We support House transportation committee chairman Edgar Sarmiento’s proposal to reduce or not increase government-imposed fees and charges,” Sam said during a House fuel ad hoc committee hearing yesterday.

Sam said jet fuel MOPS (Mean of Platts Singapore) prices have been continuously rising since December last year, starting from $79 per barrel to $124 per barrel on March 3.

“The aviation industry will continue to monitor the situation. We will exercise fiscal discipline and tap effective revenue-generating measures amid this current situation, including the implementation of cost-mitigating strategies,” he said.

Airlines are currently allowed to collect fuel surcharge as a way to partially recover losses from the soaring fuel prices and the weakening of the peso against the dollar.

The country’s matrix for fuel surcharge is determined based on the two-month average of jet fuel MOPS prices in its peso per liter equivalent and will be fixed for two months.

From March 1 to April 31, passenger fuel surcharge for domestic and international flights has increased to Level 4 from the existing Level 3 for the months of January and February.

The last time airlines were allowed to collect fuel surcharge under Level 4 was in November and December 2018, with jet fuel then averaging $90.51 per barrel, or P30.52 per liter.

Under the 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.

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 carriers.

Sam said ACAP, which is composed of Air Philippines Corp. (PAL Express), Cebgo Inc., Cebu Air Inc., Philippine Airlines Inc. and Philippines AirAsia Inc., are glad the fuel surcharge matrix is in place.

“It’s up to each individual airline to avail itself of the existing mechanism that was set up by the Civil Aeronautics Board (CAB) to help cushion the impact of the rising price of oil,” he said.

“Back in 2018, CAB in consultation with the aviation industry developed a formula to determine the fuel surcharge, which we are glad is in place in our industry. However, we would like to emphasize that the implementation or the availment of this mechanism is left to the discretion of the individual airline,” Sam said.

Aviation think tank CAPA-Center for Aviation earlier said soaring jet fuel prices could add to the woes of airlines this year.

CAPA said jet fuel prices would weigh heavily on airlines’ prospects for profitability.

This comes as airlines have yet to fully recover from the impact of the pandemic.