Airlines Drop Fuel Surcharges in the Philippines

The Civil Aeronautics Board confirmed earlier this month that all air carriers operating in the Philippines will be dropping their fuel surcharges, following the sharp decline in global fuel prices. But although Cebu Pacific, Philippine Airlines, and AirAsia Philippines have already implemented the change, travellers are not feeling much relief. 

its more fun in the philippines
Copyright Photo: Angelo Agcamaran/PPSG
On January 8, the House of Representatives issued a resolution ordering airlines operating in the Philippines to remove their fuel surcharge from airfares. The fuel surcharge was a measure implemented by the Civil Aeronautics Board to enable carriers to offset rising fuel prices. 

After the resolution was issued, the country's main airlines each issued statements confirming compliance with the directive:

"Cebu Pacific has complied with the Civil Aeronautics Board resolution and has implemented removal of fuel surcharges effective January 9," said Jorenz Tanada, Cebu Pacific's Vice President for Corporate Affairs. Meanwhile, AirAsia Zest CEO confirmed in a text message that the surcharge would be removed from their airfares.

The country's flag carrier, Philippine Airlines, stated that it would remove the fuel surcharge on its flights effective January 10. In a statement released to media, PAL stated that, "This is to comply with a Civil Aeronautics Board directive calling on all air carriers operating in the country to desist from charging its passengers fuel surcharge in view of declining crude prices."

Screenshot: Philippine Flight Network
Although Philippine Airlines announced that it would be removing its fuel surcharge earlier this month, it seems the national flag carrier has only removed it on domestic flights within the Philippines and international tickets originating in the Philippines. Overseas Filipino workers with originating flights in cities such as Singapore and Hong Kong are still being forced to pay the fuel surcharge.

Screenshot: Philippine Flight Network
However, this practice of imposing a surcharge on international flights originating outside the Philippines is not being followed by the nation's other air carriers, Cebu Pacific or AirAsia Philippines. The fuel surcharge has been removed entirely across each carrier's entire network.

Unfortunately, passengers are not seeing a major reduction in the overall price of airfares even with the removal of the fuel surcharge. Although the airlines removed their fuel surcharge, they increased the cost of their regular airfares to supplement the lost revenue. This doesn't provide savings for travellers reserving a flight at regular price. But the good news for those reserving a flight on a promo fare is that there are now savings to be found without the shock of hidden fees at check-out.

Airlines in the Philippines have been imposing a fuel surcharge since 2011 when fuel prices began to rise sharply.  Fuel represents between forty to fifty percent of an airline's operating costs. It is the second highest expense after labour.

Oil prices continue to slip towards $50 per barrel. According to the International Air Transportation Association, jet fuel prices at the beginning of January were down 81.1 percent from the previous month, averaging at $71.70 per barrel. That reflects a 43.2 percent drop from the price one year earlier.

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