Lower airfares seen as fuel surcharge lifted

MANILA, Philippines - Airline passengers can expect lower fares this year as the Civil Aeronautics Board (CAB) lifted the fuel surcharge imposed by foreign and domestic airlines.

The CAB yesterday published Resolution No. 79 dated Dec. 22, lifting the authority of domestic and foreign airlines to impose fuel surcharge on domestic and international flights.

The resolution was signed by Transportation and Communications Undersecretaries Jose Perpetuo Lotilla and Benito Bengzon Jr., Civil Aviation Authority of the Philippines director general William Hotchkiss III and former Clark International Airport Corp. president Victor Jose Luciano.

CAB executive director Carmelo Arcilla said airline passengers could expect lower fares starting this weekend.

Arcilla said the fuel surcharge imposed by domestic and foreign airlines depends on the distance of the flight.

The surcharge is between P200 and P500 for domestic flights and can be as high as P15,000 for international destinations.

Fuel cost accounts for over 50 percent of the total operating costs of airlines.

The CAB allows airlines to impose a fuel surcharge to help recover fuel costs and system losses caused by sudden spikes in fuel prices.

Based on prevailing international practice, fuel surcharge may be reduced or removed as it is not part of the basic fare, depending on the price of jet fuel in the world market.

Citing data from the Department of Energy, the CAB said fuel prices have declined by 25.51 percent from January to November last year.

Data from the International Air Transport Association showed the price of jet fuel in the world market dropped by 42 percent to $75 per barrel as of Dec. 26.

On Dec. 5, CAB asked domestic and foreign airlines to explain why they have not reduced or lifted the fuel surcharge.

Malaysian Airlines lifted its fuel surcharge as early as July 2013 while Asiana, Jin Air, Korean Air, Etihad Airways and Qantas said jet fuel remains high and it is not the only factor to be considered in imposing the fuel surcharge.