A resolution has been signed recently by the Civil Aeronautics Board (CAB) to remove fuel surcharge on all domestic and international flights in the Philippines. This is due to the “substantial and continuous decrease of fuel prices in the world market” as stated in the CAB resolution.
Fuel is one of the biggest operating expenses in airline companies. Adding fuel surcharge to airline tickets is the government’s way of helping airlines to recover the cost they spend on fuel. In domestic flights, the fuel surcharge is basically several hundred pesos, while it runs a few hundred dollars for international flights. With the price decline of crude oil globally, fuel surcharge is no longer necessary.
This week, the price of crude oil in the global market dropped to $50 per barrel due to slow demand; and it is continuously falling to about 50%.
Although some airlines are seeking reconsideration, the resolution will take effect immediately and airlines operating in the Philippines are expected to remove the surcharge from their tickets as soon as they are formally notified.
Even before the release of the new resolution, some international carriers have already lifted fuel surcharge such as Malaysia Airlines, which removed it since July 2013. While others reduced fuel surcharge since last year such as Cathay Pacific, Hong Kong Dragon and Japan Airlines.
By Monday, January 12th, we are expecting domestic carriers such as Cebu Pacific Airlines, Philippine Airlines and AirAsia to finally implement the new resolution. This means lower flight tickets for airline passengers from then on.