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MANILA - The operator of Philippines' Air Asia has raised fares after the Civil Aeronautics Board approved an increase in the carrier’s fuel surcharge to offset its losses from costlier jet fuel prices.
The CAB has granted Air Asia Inc. a provisional authority to impose a fuel surcharge of P300 per sector, up by 30 percent from P230 previously.
The CAB also approved the following fuel surcharges:
- From P400 to P460 per sector for international flights with two hours block time but less than three hours;
- From P600 to P680 per sector for international flights with three hours block time but less than four hours; and
- From P750 to P900 per sector for international flights with four hours block time and more.
A fuel surcharge is a temporary relief granted to airlines to help them recover losses incurred from higher jet fuel prices. Fuel accounts for 50-60 percent of an airline’s operating cost per passenger, and is the second-highest expense next to labor.
According to the International Air Transportation Association, jet fuel prices averaged $137.4 a barrel as of August 31, up by 5.3 percent year-on-year. Month-on-month, jet fuel prices were likewise up 11 percent.
IATA expects jet fuel prices to average $128.7 a barrel, translating to an additional $31 billion to the global industry’s fuel bill this year.
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