Airline fuel surcharge decreases anew on July 16

MANILA, Philippines – Additional charges on airfares due to fuel prices are set to go down to their lowest level since the Middle East conflict began, after the Civil Aeronautics Board (CAB) again lowered the allowable jet fuel surcharge effective July 16.

In an advisory on Monday, the regulator set the passenger fuel surcharge at Level 8, matching the rate imposed during the first half of April, the lowest level since oil prices turned volatile following the outbreak of the Middle East conflict on Feb. 28.

READ: Jet fuel surcharge to fall further in July

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The new rate, which will remain in effect until July 31, is one notch lower than the Level 9 surcharge implemented from July 1 to July 15.

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Under Level 8, airlines may collect fuel surcharges ranging from P253 to P787 on domestic flights, down from P287 to P839 under Level 9.

For international services, the surcharge will range from P835.05 to P6,208.98, compared with P947.30 to P7,044.27 previously.

Even after the sixth straight reduction, fuel surcharges remain well above the pre-conflict Level 4, when airlines could collect only P117 to P342 for domestic flights and P385.70 to P2,867.82 for international routes.

The CAB has yet to restore the normal monthly review cycle for fuel surcharges, which it shortened to 15 days in March to “reduce the lag between actual fuel costs and applicable fuel surcharge.”

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Prices largely stable

Jet fuel prices have largely stabilized in recent weeks after the United States and Iran reached a preliminary agreement to end the war, although renewed strikes between the two sides have clouded that outlook.

Data from the International Air Transport Association (IATA) showed jet fuel prices edged up to $119.13 per barrel as of July 3 from $116.63 a week earlier. Even so, prices remain well below the more than $200 per barrel recorded in April at the height of the conflict.

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Such movements are closely watched by airlines because fuel typically accounts for 25 to 30 percent of operating costs, according to the IATA.

READ: PH woos biojet fuel investments

In a report released in April, Oxford Economics also identified the Philippines and Thailand among the countries most vulnerable to an aviation slowdown driven by higher jet fuel costs.

At the height of the conflict, major Philippine carriers temporarily suspended several Middle East routes as oil prices surged.

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Under CAB Resolution No. 25, Series of 2022, fuel surcharges are imposed on top of base fares and may be removed entirely only if the one-month average price of jet fuel falls below P21 per liter. INQ