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The Civil Aviation Department (CAD) gave approval today (May 26) for the passenger fuel surcharges levied by 13 airlines to be kept at existing levels or adjusted. These airlines and their newly approved fuel surcharge levels are listed in the Annex. Most of them are adjusted from the present levels of $125 per passenger (for short haul flights) and $518 (for long haul flights) to $171 and $710 respectively. The newly approved surcharges will take effect from June 1.
Given the fluctuation in oil prices, the CAD has only approved fuel surcharges to be levied on a short term basis. The newly approved charges will only be valid until July 31.
It is an international practice for airlines to levy passenger fuel surcharges. The current average passenger fuel surcharges between major international destinations are at the levels of about $413 per passenger (short haul) and about $1,040 per passenger (long haul).
"When compared with the general amounts of surcharges at the international level, the surcharges on the local routes remain at a reasonable level (short-haul and long-haul surcharges at about 41% and 68% of the international levels respectively)," said the CAD spokesman.
Fuel surcharges are a type of aviation tariff which requires the approval of the relevant aeronautical authorities before they may be levied. When approving applications for levying fuel surcharges, the CAD takes into account changes in the prices of aviation fuel, the justifications provided by the airline operators and other relevant factors such as the charges levied by the other airlines.
Aviation fuel prices have drastically increased by about 50% since the beginning of this year. During this period, the CAD processed two rounds of fuel surcharge applications at end January and end March respectively, resulting in a cumulative increase in surcharge levels of about 11%.
ˇ§Fuel costs are part of the overall operating costs of an airline (estimated to be about 30% - 40% for most airlines). The significant increase in fuel prices has had a severe impact on the operating costs of airlines. Though the passenger fuel surcharges have increased, airlines do offer promotional fares to stimulate market demand.ˇ¨
ˇ§The purpose of the passenger fuel surcharges is to help airlines tide over the short-term fluctuations in fuel costs. When approving fuel surcharges, the CAD ensures that the revenue so generated will not exceed the additional costs borne by the airline operators due to increased oil prices during the corresponding period," a CAD spokesman said.
ˇ§It is estimated that most airlines recover about 40% ˇV 70% of their additional fuel costs through the fuel surcharges. They have to do their own cost management to absorb the rest of the increased costs.
ˇ§The passenger fuel surcharges are reviewed and adjusted regularly by the CAD, following the established mechanism. The levels will be adjusted downwards should the aviation fuel prices decrease in the future.
ˇ§For example, of the six rounds of surcharge applications processed in 2007, downward adjustments were made in three rounds,ˇ¨the spokesman said.
Ends/Monday, May 26, 2008
Issued at HKT 19:45
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