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May

Airlines seek fuel surcharge

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By Doris Dumlao-Abadilla | Philippine Daily Inquirer

Reeling from the double whammy caused by surging global oil prices and the weakening of the peso, airline operators in the Philippines have asked regulators for an increase in fuel surcharges, potentially making it costlier to travel or transport goods by air.

“The effect of fuel price and currency has been significant for us,” Lance Gokongwei, president and chief executive of Cebu Air Inc., told reporters after the stockholders’ meeting of conglomerate JG Summit Holdings on Monday.

Gokongwei estimated the effect of fuel on Cebu Air, operator of budget carrier Cebu Pacific airline, at P20 million a month for every $1 increase in fuel prices while the weakening of the peso is costing an additional P65 million a month. In sum, the combined impact of higher fuel prices and weaker peso is costing Cebu Air P700 million monthly to fly the same 61-aircraft fleet, he said.

“To avoid losses, we will try to become more efficient but likewise, we have applied for fuel surcharge increase with the CAB (Civil Aeronautics Board),” Gokongwei said.

Cebu Air petitioned for an increase in fuel charges by P70 to P250 for domestic flights. “This recovers approximately just half of the increased cost we’re facing, so we’re really trying to minimize the increase to the lowest possible amount,” he said.

The fuel surcharge is typically granted by the CAB to help airlines recover part of volatile fuel costs, which usually constitute an airline’s single-biggest operating expense.

Global oil prices have recently retested four-year highs, hitting $70 to $80 a barrel in the global market. The spike in mid-May was partly due to concerns that US efforts to sanction Iran’s crude exports could cause further tightening in crude supply.

In the case of Cebu Air, the assumption was a range of $60 to $70 a barrel for this year.

Flag carrier Philippine Airlines has likewise petitioned the CAB for an increase in fuel surcharge, with the rate depending on the route.

“It has been with the CAB for more than three months but no action yet,” PAL president Jaime Bautista said.

Meanwhile, airlines in the country are also bracing for a reduction in revenues from the six-month shutdown of tourist hotspot Boracay island.

For Cebu Air, the shutdown was seen to translate to P500 million to P1 billion in foregone revenues.

“Caticlan and Kalibo constitute about 6-7 percent of our domestic passengers. So for the first six months, we anticipate there should be maybe a P500 million to P1 billion reduction in revenues because it takes time to transfer the flights to other destinations,” Gokongwei said.

“But overall, we think this should be a strong positive for the country as we expect that Boracay will return as an even more popular destination after the rehabilitation is complete,” Gokongwei said.

Boracay was closed starting April 26 to pave the way for a massive rehabilitation plan.

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PRAD NAIA Terminal1 0919-9128457 PRAD Laguindingan 0919-9128468
PRAD NAIA Terminal2 0919-9128458 PRAD Laoag Airport 0998-5864834
PRAD NAIA Terminal3 0919-9128451 PRAD Legaspi Airport 0919-9128461
PRAD NAIA Terminal4 0919-9128470 PRAD Mactan-Cebu Int'l. 0919-9128464
PRAD Bacolod Airport 0998-5864828 PRAD Naga Airport 0919-9128462
PRAD Basco Airport 0998-5864829 PRAD Ozamis Airport 0998-5864835
PRAD Boracay Airport 0919-9128453 PRAD Pagadian Airport 0998-5864836
PRAD Busuanga Airport 0919-9128460 PRAD Puerto Princessa 0998-5864837
PRAD Butuan Airport 0998-5864830 PRAD Roxas Airport 0998-5864838
PRAD Camiguin Airport 0998-5864831 PRAD Siargao Airport 0919-9128456
PRAD Clark Int'l .Airport 0919-9128471 PRAD Surigao Airport 0998-5864839
PRAD Davao Int'l. Airport 0919-9128469 PRAD Tacloban Airport 0998-5864840
PRAD Dipolog Airport 0998-5864832 PRAD Tagbilaran Airport 0919-9128465
PRAD Dumaguete Airprot 0998-5864833 PRAD Tuguegarao Airport 0998-5864841
PRAD General Santos 0919-9128467 PRAD Virac Airport 0919-9128463
PRAD Iloilo Int'l .Airport 0919-9128466 PRAD Zamboanga Airport 0998-5864842
PRAD Kalibo Int'l. Airport 0919-9128454

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PRAD NAIA Terminal1 0919-9128457 PRAD Laguindingan 0919-9128468
PRAD NAIA Terminal2 0919-9128458 PRAD Laoag Airport 0998-5864834
PRAD NAIA Terminal3 0919-9128451 PRAD Legaspi Airport 0919-9128461
PRAD NAIA Terminal4 0919-9128470 PRAD Mactan-Cebu Int'l. 0919-9128464
PRAD Clark Int'l .Airport 0919-9128471 PRAD Naga Airport 0919-9128462
PRAD Bacolod Airport 0998-5864828 PRAD Ozamis Airport 0998-5864835
PRAD Basco Airport 0998-5864829 PRAD Pagadian Airport 0998-5864836
PRAD Boracay Airport 0919-9128453 PRAD Puerto Princessa 0998-5864837
PRAD Busuanga Airport 0919-9128460 PRAD Roxas Airport 0998-5864838
PRAD Butuan Airport 0998-5864830 PRAD Siargao Airport 0919-9128456
PRAD Camiguin Airport 0998-5864831 PRAD Surigao Airport 0998-5864839
PRAD Davao Int'l. Airport 0919-9128469 PRAD Tacloban Airport 0998-5864840
PRAD Dipolog Airport 0998-5864832 PRAD Tagbiliran Airport 0919-9128465
PRAD Dumaguete Airprot 0998-5864833 PRAD Tugeugarao Airport 0998-5864841
PRAD General Santos 0919-9128467 PRAD Virac Airport 0919-9128463
PRAD Iloilo Int'l .Airport 0919-9128466 PRAD Zamboanga Airport 0998-5864842
PRAD Kalibo Int'l. Airport 0919-9128454