Airfares stable


    Air fares will continue to be lower for November to December with the sustained decline of jet fuel prices in the world market, according to the Civil Aeronautics Board (CAB).

    In an advisory, the CAB said the fuel surcharge to be imposed on domestic and international flights for November 1 to December 31 remains at level 2, the same level implemented from September to October this year.

    The fuel surcharge to be imposed for November and December was based on jet fuel prices for August to September this year which stood at $77.07 per barrel, with the US dollar exchange at P52.19 for the same period.

    This is equivalent to P25.30 per liter, which corresponds to level 2 of the passenger fuel surcharge matrix, the CAB said.

    Airlines that intend to collect fuel surcharge for this period must file their application with the CAB before the effectivity on November 1.

    The fuel surcharge from September to December has dropped to level 2 from level 3 in July and August this year.

    At level 2 of the CAB fuel surcharge matrix, fuel surcharge for domestic flights per passenger, per way ranges from P45 to P171, lower than the level 3 which ranges from P74 to P291 per passenger, per way.

    For international flights originating in the Philippines, the fuel surcharge per passenger per way at level 2 ranges between P218 to P2,076, compared to level 3 which ranges from P381 to P3,632 per passenger per way.

    The surcharge will be suspended once the price of average jet fuel falls below P21 per liter.

    The applicable fuel surcharge is determined based on the two-month average of jet fuel Mean of Platts Singapore prices in its peso per liter equivalent, and is fixed for two months.

    The jet fuel cost is the largest expense by an airline operator. Volatility in fuel costs, culminating in recent price spikes, impelled airlines to adopt two important short-term tactics: increase revenues by applying fuel surcharges and iron out volatility by adopting increasingly complex hedging mechanisms.

    Fuel surcharge helps airlines offset part of their operations cost in which fuel bills contribute the most.