• PAL, Cebu Pacific ditch fuel surcharges

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    Flag carrier Philippine Airlines and budget carrier Cebu Pacific said they have complied with the directive of the Civil Aeronautics Board (CAB) calling on air carriers operating in the country to desist from collecting fuel surcharges from its passengers.

    PAL as well as other local and international carriers operating in Philippines recently received a directive from the CAB to cease imposing fuel surcharges given the sharp drop in oil prices in the world market.

    Fuel surcharges are a worldwide industry practice approved by government authorities.

    PAL president Jaime Bautista said, “We have carried out the necessary procedural and system adjustments in view of this latest call from government. Rest assured that PAL will always bear in mind the welfare of our customers and the traveling public.”

    Meanwhile, Atty. Jorenz Tañada, CEB vice president for corporate affairs said, “Cebu Pacific has complied with CAB resolution No. 79, and has implemented removal of fuel surcharges effective January 9.”

    Last week, CAB executive director Carmelo Arcilla said that they have approved the removal of fuel surcharges on domestic or international carriers.

    A fuel surcharge is a temporary relief granted to airlines to help them recover losses incurred from higher jet fuel prices. Fuel accounts for 40 percent to 50 percent of an airline’s operating cost per passenger, and is the second-highest expense next to labor.

    According to Arcilla, the order for fuel surcharge lifting was signed on January 6.
    “With the substantial and continuous decrease of fuel prices in the world market, the Board has deemed it appropriate to compel airlines to discontinue their imposition of fuel surcharge,” CAB said.

    CAB resolution number 79 MB 10-12-22-2014 states that on December 5 and 18 last year, the CAB called for a hearing with both domestic and foreign airlines to determine to propriety of maintaining the imposition of the fuel surcharges in light of the significant reduction in fuel costs. The airlines were required to report if they have reduced or lifted the imposition of the fuel surcharge or to explain why they have not done so.

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