MANILA, Philippines - Soaring fuel prices in the world market have prompted Philippine Airlines (PAL) to seek a fuel surcharge increase by as much as $100 per ticket on international flights.
In an interview, PAL President Jaime Bautista said the flag carrier had no recourse left but to petition the Civil Aeronautics Board (CAB) to raise the rate it collects from passengers booked for international flights. “Fuel cost is still our single biggest expense. We need to do this,” he said.
The fuel surcharge, imposed on top of regular fares, is a temporary relief given by the CAB to allow airlines to mitigate losses from the upward spiral of the cost of jet fuel.
Fuel accounts for 40 percent of an airline’s operating cost per passenger and is considered the second highest, next to labor.
The International Air Transport Association recently said jet-fuel price has increased by 9.7 percent to $137.1 per barrel from March 2011.
For Manila to the United States, except Honolulu, PAL will seek $300 from the current $200; Manila to Australia, $200 from $150; Japan, India and Beijing, $100 from $75; Shanghai, $85 from $75; Korea, Bangkok, $80 from $75; Taipei, Hong Kong and Macau, $55 from $45.
PAL will file its petition before the CAB today.
PAL Spokesman Cielo Villaluna said the figures cited are tentative as of Friday afternoon. “The proposed increases are subject to final assessment discussion by PAL. However, filing will be done Monday [March 19].”
PAL is 95-percent owned by tobacco and beer magnate Lucio Tan, while Airphil Express is 99-percent owned by the Lucio Tan group. PAL already raised its fuel surcharge for the Visayas and Mindanao routes on March 14.
Flights from Manila to Visayas now carry a P352 fuel surcharge, while passengers bound to Mindanao from Manila are charged P463 per ticket. Fuel surcharge for Manila to Luzon will remain.
Airphil Express also sought an increase in fuel surcharge for its flights from Clark and Manila to Luzon, from P250 to P300; while flights to Visayas will increase to P400 from P300. The fuel surcharge on flights to Mindanao will also jump to P500 from P400.
For its inter-Visayas and inter-Mindanao flights, the fuel surcharge will increase to P300 from P250. The fuel surcharge for flights from Visayas to Mindanao will rise to P350 from P300.
Meanwhile, Zest Airways Inc. also sought a P100 adjustment.
Flights bound to Legaspi, Marinduque, Masbate, San Jose, Tablas, Virac and Busuanga, the budget airline wants to collect P350 in fuel surcharge. For Puerto Princesa, Bacolod, Calbayog, Catarman, Cebu, Iloilo, Kalibo, Tacloban and Tagbiliran, Zest Air applied for a P400 fuel surcharge. Its Manila to Davao and Cagayan de Oro flights may carry a P500 fuel surcharge if its application is approved.
The CAB has set on March 28 a hearing to tackle Zest Air’s application and on April 10 for Airphil Express’s petition.
Bautista said on Friday that PAL was expecting a 10-percent to 12-percent increase in domestic traffic this 2012.
He also said the number of passengers is expected to grow to 10 million at end of this year.
PAL is also looking at an increase in its average load factor from 70 percent to around 78 percent or 79 percent this year.
The markets in every city are growing. That’s why there are new airports that are being developed to support the growth in market. Also, we have new airplanes coming in,” said Bautista when he was asked where the traffic increase would be coming from.
This year PAL is taking delivery of two Boeing 777-300ERs and four Airbus A320, which can be used for its planned Darwin, Australia, flights.
PAL currently has a fleet of 13 Airbus A320s and four Boeing 777s.
We are still studying Darwin in Australia as a new route. We can operate our AirbusA320 from Cebu to Darwin. From Cebu, the travel time is less than four hours. We will use a smaller airplane to develop a new market,” said Bautista.
Meanwhile, Vivienne Tan, PAL’s executive vice president-commercial group, said on Friday evening the flag carrier will “excite the market with new programs that will aim to strengthen loyalty of our passengers.”
During its 71st anniversary, PAL unveiled its new marketing campaign, “Love, Your PAL,” which depicts PAL’s gratitude to its loyal customers over the last 71 years.
Passengers buying regular- fare tickets from March 15 to 21, 2012, can buy a second ticket for as low as P77 on domestic routes, $7 on regional destinations, and $277 on international flights.
“All the issues and problems that have hindered our growth last year are behind us now. I am proud that the work of the PAL team has resulted in a great rebound in our sales and passenger count.”
The PAL chairman’s daughter added: “I ask your support by patronizing our attractive offers that go beyond price.”
“We have laid the foundation to strengthen our brand image and reinforce our brand equity. This year we will further reinforce our superiority over other local carriers,” Tan said.