Air fares to go down next month

Air fares will become cheaper starting next month as the applicable fuel surcharge level allowed to be imposed by airlines fell another notch on the continued decline of jet fuel prices.

The Civil Aeronautics Board (CAB) said that passenger fuel surcharge for domestic and international flights from March 1 to April 30, 2019 would go down to Level 2 from Level 3 during the January to February period.

Under Level 3 of the fuel surcharge matrix, airlines are allowed to impose an increase of P45 to P171 per passenger for domestic flights, and P218 to P2,076 for international flights.

This is compared to the existing P74 to P291 allowable increase for domestic passengers, and P381 to P3,632 for international passengers under

Level 3.

“The average aviation fuel prices for the months of December 2018 to January 2019 was $73.50 per barrel, which is equivalent to P24.32 per liter. This corresponds to Level 2 in our fuel surcharge matrix. This will be effective on March 1,” CAB executive director Carmelo Arcilla told The STAR.

“We are experiencing a downward trend in the surcharge from Level 4 to Level 3 effective Jan. 1, 2019, and now Level 2 effective March 1, 2019,” Arcilla added.

Airlines are allowed to collect fuel surcharge rates that are lower than the stated level if they choose to do so depending on how they want to compete with other carriers.

Airlines wishing to impose or collect fuel surcharge are required to file their application with the CAB on or before the effectivity period.

The CAB last September decided to allow the reimposition of fuel surcharge on the back of soaring fuel prices.

The agency has adopted a matrix for fuel surcharge that will be determined based on the two-month average of jet fuel MOPS (Mean of Platts Singapore) prices in its peso per liter equivalent and will be fixed for two months. Should the two-month price average of jet fuel per liter fall below P21, then no fuel surcharge will be collected.

The fuel surcharge is a way in which airlines can partially recover losses from the soaring fuel prices and the weakening of the peso to the dollar. Fuel cost accounts for over 50 percent of the total operating costs of airlines.