Airlines add fuel surcharge to ticket prices

Airlines add fuel surcharge to ticket prices
Image from philstar.com

MANILA, Philippines — Local airlines have started implementing higher rates in line with the revival of the fuel surcharge.

Officials from Philippine Airlines and Cebu Pacific said yesterday their companies started last Wednesday the imposition of fuel surcharge, which is included in the prices of tickets.

Philippines AirAsia Inc. chief executive officer Dexter Comendador said his company has also filed an application to impose fuel surcharge last Friday and is now waiting for its official approval.

“We implemented last week based on the fare matrix, last Wednesday,” said Alexander Lao, president and CEO of Cebgo Inc., a unit of Gokongwei-owned carrier Cebu Pacific.

“It is quite important because of the soaring fuel prices and the weakening of the peso against the dollar. Actually the Philippines is one of the last few countries, at least in destinations where we are flying, that implemented the fuel surcharge,” he said.

According to Lao, the fuel surcharge being implemented at present is as little as P74 per passenger for minimum distance domestic flights.

Lao said having the fuel surcharge in place would prevent airlines from canceling flights or pulling out from specific routes due to losses incurred from skyrocketing fuel costs and peso depreciation.

“But the surcharge is not meant to recover all the costs. Fuel surcharges only recover a portion of the costs. I think it’s 70 to 80 percent. It does help so I don’t think the airlines are opposed to it given how prices of fuel are increasing,” he said.

Lao, however, said airlines should also be conscious of the possible impact of implementing fuel surcharge to passenger demand.

Airlines are given the freedom to impose fuel surcharge or not, but the rates should they opt to do so must be based on a fuel matrix set by the government.

Based on the published and approved matrix, fuel surcharge rates for domestic flights are divided into five categories, depending on the flight distance. These are from zero to 200 kilometers (kms), 201 to 400 kms, 401 kms to 600 kms, 601 to 800 kms, 801 kms to 1,000 kms, and more than 1,001 kms.

For domestic flights of up to 200 kms, fuel surcharge would range from P34 to P201 per passenger, depending on the two-month price average of jet fuel.

As for flights that are more than 1,001 kms, fuel surcharge to be imposed would range from P132 to P769, again depending on the price average of jet fuel.

Meanwhile, for international flights originating from the Philippines, groups are divided into seven, namely: 1) Taiwan, Hong Kong, Vietnam, Cambodia, Brunei; 2) China; 3) Singapore, Thailand, Malaysia, Guam; 4) Indonesia, Japan, South Korea, Port Moresby; 5) Australia, Middle East 6) New Zealand, Honolulu; and 7) North America, United Kingdom.

For the nearest routes or the first group, fuel surcharge would range from P163 to P1,035, while flights to North America and United Kingdom would see additional cost of between P1,557 to P9,860.

 

article shared from https://www.philstar.com/business/2018/09/25/1854335/airlines-add-fuel-surcharge-ticket-prices
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