Philippine travelers must brace for more expensive airfares in early September as the Civil Aeronautics Board (CAB) has again raised the allowable fuel surcharge, which airlines charge on top of base fares to account for volatility in jet fuel prices.
In an advisory dated Aug. 27, the regulator said the fuel surcharge would revert to Level 13 from Sept. 1 to 15 after retreating to Level 12 from Aug. 16 to 31, as prices in the global jet fuel market drifted higher.
Under Level 13, airlines may collect an additional P423 to P1,237 for domestic trips, up from the P389 to P1,137 in allowable surcharges under Level 12.
That same increase will apply to international flights, with allowable fuel surcharges rising to between P1,396.74 to P10,385.42 from P1,284.40 and P9,550.13 in the previous cycle.
CAB said airlines would add these charges on top of base fares and apply a conversion rate of P61.39 per US dollar.
The increase comes amid continued volatility in the global jet fuel market as the Strait of Hormuz, the crucial waterway through which about a fifth of the world’s oil passes, remains largely closed in the absence of a firm peace agreement between the warring United States and Iran.
Based on monitoring by the International Air Transport Association, jet fuel prices recorded two straight weekly increases-to $163.87 per barrel as of Aug. 21 from $158.91 per barrel the previous week-after declining in early August and late July.
Such volatility in fuel prices has pronounced effects on airlines, as jet fuel typically account for about 25 percent to 30 percent of their costs.
Two of the largest airlines in the Philippines-Gokongwei-led Cebu Pacific and Lucio Tan-led Philippine Airlines (PAL)-ended the first half in the red as higher fuel costs weighed on their finances, while elevated airfares also pressured travel demand.
PAL ended the first semester with a net loss of $25.1 million as fuel expenses surged to $674.5 million. Cebu Pacific, meanwhile, incurred a P5.9-billion net loss as expenses ballooned to P68.28 billion.