CAB amends fuel surcharge matrix

Published June 23, 2022, 11:49 AM

by Emmie V. Abadilla

As global aviation fuel prices continued to skyrocket, the Civil Aeronautics Board (CAB), in its Wednesday, June 22, advisory, added 13 more levels to its passenger and cargo fuel surcharge matrix, which until this month has Level 7 at the maximum.

Now, CAB’s passenger and fuel surcharge matrix is up to Level 20. By July 1 to 31, 2022, CAB has set the surcharge at Level 11 for domestic and international flights. Furthermore, the CAB introduced a fuel surcharge matrix for cargo in the belly-hold of passenger planes.

Under Level 11, airlines can collect surcharges of P355 to P1,038 per passenger for domestic flights, and P1,172.07 to P8,714.84 for international flights.

On the other hand, the Level 11 cargo fuel surcharge translates to increases of P1.82 to P5.34 per kilogram for domestic flights and P6.03 to P44.80 per kg for international flights.

Before, the fuel surcharge was only applied to passengers, which was just one component of a dual service covering both passenger and cargo operations.

Inasmuch as the surge in aviation fuel prices also affect cargo carried in the belly-hold of passenger planes, CAB included cargo fuel surcharges in its new guidelines.

However, CAB specified that the cargo fuel surcharge shall only apply to cargo carried in the belly-hold of planes used for combination services and the cargo must be covered by an airway bill.

The cargo fuel surcharge should be based on the actual weight carried per segment and not be levied against a passenger’s check-in baggage.

The board’s cargo fuel surcharge matrix ranges from P0.19 per kilogram to P9.94 per kg for domestic flights.

For international flights originating from the Philippines, the rates range from P0.64 per kg to P83.45 per kg, depending on the applicable fuel surcharge level for the given period.

Rates for the new passenger fuel surcharge matrix range from P37 to P1,933 for domestic flights, and P123.57 to P16,232.44 for international flights.

The CAB determines the applicable fuel surcharge based on a one-month average of jet fuel MOPS (Mean of Platts Singapore) prices in its peso per liter equivalent.

“For May 10 to June 9, 2022, the price of jet fuel averaged P53.49 per liter, which corresponds to Level 11 of the passenger and cargo fuel surcharge matrix,” the CAB advisory stated.

The passenger fuel surcharge level in effect on the day of ticketing will be applied and should be the same for all passengers – adults, children and infants occupying seats.

Also, the applicable fuel surcharge shall be collected per passenger, per segment.

However, airlines can slap on lower than the stated level of fuel surcharge rates if they want to be more competitive and haul in more passengers.

The airlines can also opt not to impose the fuel surcharge at all.

Before, some airlines opted not to impose fuel surcharges and increase ticket prices because the travel market is price-sensitive.

Increased ticket prices usually discourage people from traveling and dampens demand.

The fuel surcharge is an optional fee which airlines add to the cost of passenger fares to contain their losses due to surges in fuel prices.