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December 22, 2014

Abolish airline fuel surcharge amid oil price crash – LPG-MA

News Release

Office of LPG-MA Rep. Arnel Ty, House Deputy Minority Leader

Room 607 South Wing, House of Representatives, Constitution Hills, Quezon City, Tel No. 931-5144

 

December 13, 2014

 

Abolish airline fuel surcharge amid oil price crash – LPG-MA

Passengers deserve cheaper fares – solon

 

       With world oil prices now at their lowest levels since 2009 and still headed down, the LPG Marketers’ Association (LPG-MA) has urged the Civil Aeronautics Board (CAB) to abolish the fuel surcharge tucked by airlines into passenger tickets.

        “To allow passengers to enjoy lower airfares, the CAB should eliminate the fuel surcharge mechanism. Better yet, it should be replaced with a fuel discount scheme that will compel airlines to automatically lower fares as oil prices go down,” said House Deputy Minority Leader and LPG-MA Rep. Arnel Ty.

        “Depending on the airline and the route, the fuel surcharge is around P500 per domestic passenger and up to $400 per international passenger,” said Ty, a senior member of the House transportation committee

        Ty said airline passengers, including overseas Filipino workers (OFWs), deserve to benefit from cheaper fares as a result of the plunge in oil prices.

        “Whether the OFW is returning or leaving, $400 (P18,000) is a lot of money and potential savings,” he pointed out.

        Citing Philippine Overseas Employment Administration statistics, Ty said more than 5,000 Filipinos fly out of the country every day to work abroad.

        Meanwhile, the volume of domestic airline passengers alone is expected to hit more than 21 million this year.

        The CAB originally allowed airlines to collect a fuel surcharge to help them recover some of their rising fuel costs. The extra fee is part of the ticket price and shouldered by passengers.

        “There is absolutely no longer any need for the surcharge, because world oil prices are going down and nowhere else,” Ty said.

        Oil prices have fallen below $60 per barrel, down 47 percent from $107 in June this year.

        The multinational financial services firm Morgan Stanley projects that oil prices will fall further to as low as $43 per barrel by the third quarter of 2015.

        “The world is being swamped with oil, and still, the Organization of the Petroleum Exporting Countries is not slashing production,” Ty said.

        Amid the oversupply, world demand for oil has been eroded by the slowing economies of the United States, China, Europe and Japan.

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