To cover price hikes, airlines to slap new fee

MANILA, Philippines — Travelers may have to pay more for their plane tickets before the year ends, as airlines propose to collect a new fee of up to P300 per flight to cover price hikes at the Ninoy Aquino International Airport (NAIA).

Domestic carriers Philippine Airlines (PAL), Cebu Pacific and AirAsia Philippines are asking the Civil Aeronautics Board (CAB) to approve the collection of a terminal enhancement fee to help recover the increasing cost of flying in NAIA.

The STAR learned that all three carriers are seeking a terminal enhancement fee of P75 per way for domestic flights, meaning a passenger going on a local round trip may have to pay P150 more.

Further, Cebu Pacific is proposing a terminal enhancement fee of P300 per way for international flights, with PAL pursuing around the same rate.

AirAsia Philippines is seeking P275 per way for its foreign trips, which are mostly within Southeast Asia and Northeast Asia.

PAL, Cebu Pacific and AirAsia Philippines want to collect a terminal enhancement fee to temper the impact of higher service charges in NAIA. New NAIA Infrastructure Corp. (NNIC) has doubled, if not tripled, airport costs since taking over last month.

NNIC, led by San Miguel Corp., is tasked to undertake the P170.6-billion upgrade of NAIA, and is allowed by an administrative order (AO) approved by the Cabinet to raise airport fees.

A document obtained by The STAR showed that PAL and Cebu Pacific would have to shell out a combined P6.25 billion to shoulder the first year of higher prices.

In particular, for Cebu Pacific, the increase in NAIA fees translates to as much as P9.3 million a day, for a total of P3.39 billion in a year, which is already 43 percent of its profit in 2023.

The cost impact for Cebu Pacific covers the adjusted fees in landing and takeoff, aircraft parking, tacking operations, use of counters and terminal rental. Based on the new rates, the airline may incur an increase of nearly 400 percent for landing and takeoff alone.

Estimates showed that Cebu Pacific has to charge each passenger at least P737 for international flights and P188 for domestic trips, on a round trip basis, to recover the price hikes. However, the carrier has no plans of passing on all of the cost burden to sustain travel demand.

Moreover, The STAR found out that AirAsia Philippines would have to pay triple for its landings and takeoffs at NAIA, forcing it to charge guests a terminal enhancement fee.

In spite of this, the airline most popular for budget fares will also cover some of the cost burden on its own to ensure that travelers will still be encouraged to book flights.

Sources told The STAR that CAB is scheduled to hold a board meeting toward the end this month to discuss the proposals for a terminal enhancement fee.

If approved, the fee will be listed as one of the items in the booking receipt of a passenger, on top of the usual costs like base fare, fuel surcharge, passenger service charge (PSC) and value added tax. Airlines are separating it as a fee, and not tucking it in fares, so travelers know what they are paying for.

As outlined under the AO, travelers will also pay higher PSC from September 2025 onward. By then, the PSC will go up by 72 percent to P950 for foreign departures and by 95 percent to P390 for domestic flights.

Under Revised AO 1, Series of 2024 of the Manila International Airport Authority, service rates in NAIA are scheduled to increase in tranches over the 15-year concession of NNIC.

The NNIC, in exchange, has to remit 82.16 percent of airport revenues, excluding the PSC, to the government, on top of the P30 billion in upfront payment, along with P2 billion in annuity fee.