Filipinos planning to travel during the Christmas season will have to contend with elevated air fares as the government has decided to retain the fuel surcharge at its highest level for the year. The announcement was made by the Civil Aeronautics Board (CAB), stating that the fuel surcharge would stay at Level 7 in December, maintaining the same rate as in November.
Under CAB’s classification, Level 7 allows airlines to impose a fuel surcharge ranging from P219 to P739 for local flights and P722.71 to P5,373.69 for international trips. Carriers seeking to implement the surcharge are required to submit their applications to CAB before December.
The decision to maintain the fuel surcharge at its highest level comes after two consecutive months at Level 6 in September and October. Prior to that, the fuel surcharge was kept at its lowest point of Level 4, providing travelers with the most affordable air fares of the year.
The fuel surcharge is imposed by airlines to compensate for the losses incurred from fluctuations in jet fuel prices. By adding the surcharge to passengers’ bills, carriers aim to recoup some of these costs.
Despite the impact of the fuel surcharge, the country’s largest airlines, Philippine Airlines (PAL) and Cebu Pacific, are expecting a robust holiday season. With pandemic restrictions being lifted, both airlines anticipate their flight and passenger volumes to return to pre-pandemic levels.
PAL President and Chief Operating Officer, Stanley Ng, is optimistic about the airline’s performance in the fourth quarter, projecting a load factor of up to 90 percent. The load factor represents the percentage of seats sold against the available slots and is used to evaluate an airline’s performance.
Cebu Pacific’s President and Chief Commercial Officer, Alexander Lao, also shared positive expectations, stating that the airline could achieve a load factor equal to or even higher than its pre-pandemic high of 87 percent in 2019. The carrier is actively promoting air travel during the holiday season to stimulate demand.
Both PAL and Cebu Pacific have experienced a financial rebound due to the recovering travel demand. PAL reported a profit of P15.16 billion, while Cebu Pacific posted a profit of P5.03 billion at the end of September.
While the fuel surcharge may impact travel costs for Filipinos during the Christmas season, the industry’s recovery and efforts by airlines to stimulate demand indicate a positive outlook for the holiday travel season.
1. What is a fuel surcharge?
A fuel surcharge is an additional fee imposed by airlines to recover the losses incurred from changes in jet fuel prices.
2. How does the fuel surcharge affect air fares?
The fuel surcharge increases the cost of air travel as it is added to passengers’ bills. This can result in elevated air fares, particularly during periods of high fuel prices.
3. What is the significance of Level 7 in CAB’s matrix?
Level 7 in CAB’s matrix allows airlines to impose a fuel surcharge within a certain range based on flight type (local or international). In this case, it corresponds to a higher surcharge amount for both local and international flights.
4. How do airlines evaluate their performance using the load factor?
The load factor is calculated by comparing the number of seats sold to the total available seats. It is used to gauge an airline’s performance by measuring its capacity utilization.
5. Are airlines expecting a strong holiday season despite the fuel surcharge?
Yes, Philippine Airlines and Cebu Pacific are anticipating a robust holiday season with flight and passenger volumes returning to pre-pandemic levels. They are actively promoting air travel to stimulate demand during this period.