Higher airfares due to hike in CAB fuel surcharge

The Civil Aeronautics Board (CAB) has again raised fuel surcharge levels leading to higher airfares in September.

CAB increased the applicable surcharge rate to Level 13 for the period of Sept. 1 to 15 from Level 12.

Under Level 13 fuel surcharge, airlines may impose a surcharge of ₱423 to ₱1,237 for domestic flights and between ₱1,396.74 and ₱10,385.42 for international flights.

The exchange rate for airlines selling fares in foreign currencies was fixed at ₱61.39 to $1, according to CAB.

CAB is adjusting the fuel surcharge upward after jet fuel prices rose by 13% month-on-month to $163.87 per barrel as of Aug. 21.

Airlines are allowed to collect a fuel surcharge from passengers to recover financial losses caused by price hikes in jet fuel.

Given the volatility in the market, the CAB is adjusting the fuel surcharge level every 15 days, from the usual one-month coverage, to be more responsive to prevailing prices.

The upcoming increase in the fuel surcharge may impede travelers’ plans to book early flights for the upcoming holiday season, as airfares would become slightly higher.

This comes at a time when passenger demand in the aviation industry is relatively stable and in need of some much-needed room for growth.

Based on the latest CAB data, the country’s passenger traffic from January to June increased by only one percent to 32.65 million from 32.25 million in the same period last year.

International demand was the major driver of growth, increasing by nearly three percent to 15.27 million from 14.87 million a year ago.

Passenger traffic for domestic flights remains steady at 17.38 million as airlines were forced to pause some routes due to higher fuel costs.

PAL is expanding its international network as it maintains its leadership in the segment against low-cost carrier Cebu Pacific.

CAB data showed Cebu Pacific handled 3.41 million passengers by the end of June. PAL ranked second with 3.39 million passengers.