A Transportation Department official said he is inclined to allowing local airlines to re-impose a fuel surcharge to offset airline losses due to rising oil prices.
Capt. Manuel Antonio L. Tamayo, DOTr undersecretary for aviation, said they are studying the fare matrix schemes of Philippine Airlines (PAL) and Cebu Pacific Air submitted to the Civil Aeronautics Board.
These will determine the corresponding add-on charges considering movements in oil prices.
International Air Transport Association reported the price of jet fuel at $90.2 per barrel as of July 6 this year which is 50% higher compared to last year.
Capt. Tamayo said the surcharge, to be included in the ticket price, will help airlines offset losses from fuel costs.
“What might happen is they cancel flights in routes where they are losing money,” Tamayo said.
PAL posted a comprehensive net loss of $129 million last year, reversing an $86-million profit in 2016. Cebu Air Inc. said profit last year dropped almost 19% as it cited lower yields given increasing oil prices.
PAL president Jaime Bautista earlier warned that PAL would book a loss in 2018 if its request to impose a fuel surcharge was not granted. The practice was scrapped in 2015, when oil prices were on the decline.
Among local carriers, only Philippines Air Asia has yet to file an application seeking a fuel surcharge for its flights.
Philippines Air Asia CEO Dexter Comendador said the airline would consider applying if PAL and Cebu Pacific were allowed to impose the surcharge.
Comendador said the high cost of oil remained a risk. To offset these expenses, he said Philippines Air Asia may cut unprofitable routes and slow expansion initiatives.