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December 22, 2014

BUSINESSMIRROR ONLINE: CAB told Abolish airline fuel surcharge amid oil-price plunge

AS global oil prices plunged to lowest levels since 2009, a party-list lawmaker on Saturday urged the Civil Aeronautics Board (CAB) to abolish the fuel surcharge tucked by airlines into passenger tickets.

House Deputy Minority Leader and LPG Marketers’ Association Rep. Arnel U. Ty said that the CAB should eliminate the fuel-surcharge mechanism as oil prices continue to decrease. 

“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,” Ty said.

“Depending on the airline and the route, the fuel surcharge is around P500 per domestic passenger and up to $400 [P18,000] per international passenger,” added Ty, a senior member of the House Transportation Committee.

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, Ty said.

He added that 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.

According to the lawmaker, 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 said. 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.

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