New fuel surcharge to bloat airfares

Travelers have been warned by the Civil Aeronautics Board (CAB( that they should expect an increase in airfares by next month.

The board is increasing the fuel surcharge by a notch, resulting in slightly higher airfares.

In an advisory, the CAB said it is increasing the applicable surcharge rate to Level 13 for the period of Sept. 1 to 15 from the current Level 12.

Under Level 13, 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 is ₱61.39 to $1, the CAB said.

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

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

Due to the volatile prices of jet fuel, the CAB is adjusting the fuel surcharge level every 15 days, from the usual one-month coverage, to be more responsive to prevailing prices.

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.

Broken down, 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, on the other hand, remained steady at 17.38 million as airlines were forced to pause some routes due to higher fuel costs.

Against this backdrop, flag carrier Philippine Airlines (PAL) is raising its Manila-Melbourne operations from five times a week to daily flights beginning Nov. 19.

PAL said the expanded connectivity to Melbourne is in direct response to projected increased demand for the service during the holiday season.

PAL is working on expanding its international network as it looks to maintain its leadership in the segment against competition from low-cost carrier Cebu Pacific.

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