aviation industry

Tugade opposes fuel surcharge hike for airlines

Aika Rey
Tugade opposes fuel surcharge hike for airlines

PAL. A Philippine Airlines plane at the Ninoy Aquino International Airport.

Angie de Silva/Rappler

Increases seem unlikely since Transportation Secretary Arthur Tugade says higher fuel surcharges should be avoided

CEBU, Philippines – Transportation Secretary Arthur Tugade opposes any form of increases that would lead to higher fares, signaling that approval of such hikes would be unlikely.

In a media interview on Tuesday, March 29, Tugade echoed the Philippine economic managers’ position that hiking wages and fares would have an inflationary effect on goods and services.

Flag carrier Philippine Airlines is seeking a higher fuel surcharge following increases in jet fuel prices. The Civil Aeronautics Board (CAB), which Tugade chairs, has yet to approve this plea, but the transportation chief seems to have already rejected the idea of any increases.

“Sinabi ko, kung maari, lumihis tayo diyan kasi ‘pag mag-fuel surcharge, ipapasa sa pasahero ‘yan – mapapataas na naman ang cost of travel,” Tugade said.

(I said, if it’s possible, let’s avoid increasing the fuel surcharge because the costs would be passed on to passengers – it will only increase the cost of travel.)

The CAB earlier upgraded to Level 4 the fuel surcharge that airlines can collect from passengers from March to April 2022. Based on the CAB’s matrix, a Level 4 fuel surcharge ranges from P108 to P411 for domestic flights and P543 to P5,026 for international flights.

Cebu Pacific, meanwhile, will not be seeking a higher surcharge to maintain lower fares. Cebu Pacific chief executive officer Lance Gokongwei said they will follow the CAB’s matrix.

Instead of hiking the pass-on cost, Tugade said he is looking at the possibility of providing subsidies to airline and shipping companies, similar to what was given to drivers and operators. Earlier, Tugade thumbed down the prospect of a higher minimum wage, preferring the service contracting program and the fuel subsidy program instead.

“Sa Kongreso, hahanap kami…. Makikisumamo kami kagaya ng pagbigay nila ng tulong…kagaya ng siste at proseso ng fuel subsidy at service contracting,” he said.

(With Congress, we will look [for funds]. We will ask them for similar assistance, like the process for fuel subsidy and service contracting.)

The 2022 budget of the Department of Transportation (DOTr) has a specific line item for the service contracting program and the fuel subsidy given to public utility vehicle drivers. For airlines and shipping firms, there is none. 

It is unclear if Tugade would be pushing for a supplemental appropriations bill for this potential aid since Congress is on break until May 23. Tugade deferred to President Rodrigo Duterte, who can call for a special session of Congress.

The DOTr has so far waived airlines’ airport fees until the end of 2022. Similarly, Tugade said on Tuesday he has also ordered that the waiving of terminal fees be extended as assistance to shipping firms.

The Air Carriers Association of the Philippines earlier said it supports a House panel’s proposal for the government to either reduce or not increase fees imposed by the government on the aviation industry.

On Tuesday, oil firms hiked fuel prices again, following a big-time rollback. – Rappler.com

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Aika Rey

Aika Rey is a business reporter for Rappler. She covered the Senate of the Philippines before fully diving into numbers and companies. Got tips? Find her on Twitter at @reyaika or shoot her an email at aika.rey@rappler.com.