CAB reviewing fuel surcharge policy

The Civil Aeronautics Board (CAB), in its latest advisory, announced it is reviewing its passenger fuel surcharge policy for domestic and international flights.

In the meantime, the current Level 4 passenger fuel surcharge, which is normally fixed for two months, stays in place for just one month, until May, 2022.

The board neither gave any rationale for the review nor indicated if there will be increases in the surcharge

In CAB’s prevailing Level 4 matrix, airlines can increase their fuel surcharge by P108 to P411 per passenger for domestic flights, and from P543 to P5,189 for international flights.

Airlines pass on the cost of increased aviation fuel prices to passengers via the surcharge to enable them to recover their losses.

Earlier, Department of Transportation (DOTr) Secretary Arthur Tugade opposed higher fuel surcharges because they will push up the price of air fares and discourage people from traveling.

“My position is to maintain your cost of travel at a minimum. Do not increase it yet,” he maintained.

The CAB revoked the authority of airlines to impose fuel surcharges seven years ago but allowed the re-imposition of surcharges in 2018 when world fuel prices skyrocketed.

The board then issued a fuel surcharge matrix to ascertain the applicable surcharge based on the two-month average of jet fuel MOPS (Mean of Platts Singapore) prices in its peso per liter equivalent.

CAB allows airlines to collect fuel surcharges lower than the stated level for two-months.

However, it is an optional fee. Some airlines waive the surcharge to price their fares lower and gain an edge over their competitors.