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Details of airline fuel surcharge released

/ 05:38 AM September 12, 2018

The Civil Aeronautics Board (CAB) has detailed the range by which ticket prices could increase after it recently allowed airlines to again impose the fuel surcharge on flyers due to the higher cost of oil.

According to the CAB, the fuel surcharge—which airlines pass on to their customers as a component of the ticket price—could add a minimum of P34 to as much as P769 for a one-way domestic flight. For international flights, the range is from P163 to as much as P9,860 for a one-way ticket.

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The fuel surcharge, a mechanism that airlines can tap to offset fuel costs, would depend on the distance flown as well as the two-month average price of jet fuel. The CAB also outlined the point where the surcharge would be scrapped: If the price of jet fuel falls below P21 a liter, or about $62 a barrel, based on the current exchange rate.

The price of jet fuel stood at $92 a barrel as of end of August 2018, according to S&P Global Platts, which provides information on energy and commodities. This is 24.5-percent higher than the cost of jet fuel a year ago.

Based on the CAB’s approved matrix, the price of jet fuel fell under a category that assumed a fuel cost of P30 to P33 a liter. This meant a hypothetical flight from Manila to Cebu, which covers around 568 kilometers, could cost an additional P235 for a one-way flight. A flight to Japan or South Korea, meanwhile, could cost an additional P962 for a one-way ticket.

The top end of the range, a fuel surcharge of P9,860, could be levied for flights to North America or the United Kingdom should the price of jet fuel rise to about P40 a liter, or $119 a barrel.

According to the International Air Transport Association, the global trade group of the world’s airlines, the price of jet fuel is expected to average around $84 a barrel for 2018.

The fuel surcharge was scrapped in early 2015 when the average price of jet fuel fell to $52 a barrel, down 22 percent from the previous year and lower by 60 percent from the high of $129.6 a barrel in 2012.

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TAGS: Civil Aeronautics Board (CAB), fuel surcharge
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