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Following is a question by the Hon Paul Tse Wai-chun and a written reply by the Secretary for Transport and Housing, Ms Eva Cheng, at the Legislative Council meeting today (April 13):
Question:
Traders selling general commodities will not and cannot levy surcharges for rising prices of raw materials, yet the Civil Aviation Department (CAD) has all along allowed airlines, in selling air tickets, to collect from passengers through registered travel agents (travel agencies) aviation passenger fuel surcharges (fuel surcharges) which are not specified in advance in advertisements or airfares. In this connection, will the Government inform this Council:
(a) of the number of applications from airlines for increasing fuel surcharges approved by CAD in the past two years, and the respective average increases in fuel surcharges for short-haul and long-haul flights during the period;
(b) whether CAD had rejected or queried in writing applications from airlines for increasing fuel surcharges in the past three years; if it had, of the details of each case being rejected and queried in writing; if not, the reasons for not rejecting or querying any application;
(c) whether it will revise the present practice by requiring airlines to include fuel cost in airfares, so that passengers know clearly the actual airfares in advance, so as to safeguard the rights and interests of consumers; and
(d) given that some members of the trade have pointed out that fuel surcharges are actually part of the airfares, and according to a recent court case of the Federal Court of Australia (Leonie's Travel v Qantas Airways Limited), such charges should be included in calculating the commissions payable to travel agencies, whether CAD will consider requiring airlines to adopt such principle for calculating commissions as one of the conditions for allowing them to levy fuel surcharges; if it will, when it will implement such an arrangement; if not, of the reasons for that?
Reply:
President,
(a) According to the bilateral air services agreements (ASAs) that Hong Kong has entered into with its aviation partners, the tariffs to be charged by the airlines for scheduled air services shall be those approved by the aeronautical authorities of both Contracting Parties and shall be established at reasonable levels, due regard being had to all relevant factors. Passenger fuel surcharges (fuel surcharges) are part of aviation tariffs which allow airlines to partially recover the increase in operating costs due to fluctuations in aviation fuel prices. The Civil Aviation Department (CAD) considers and approves fuel surcharge applications from the airlines in accordance with the ASAs.
In the past, CAD approved the airlines' fuel surcharge applications on a bi-monthly basis. Since October 2009, the applications have been approved on a monthly basis. The fuel surcharges approved every time will come into effect the next month. From April 2009 to March 2011, CAD approved in 21 rounds a total of 1,157 fuel surcharge applications, of which 752 cases involved increases, 212 cases involved reductions and the remaining 193 cases involved no change.
The average fuel surcharge levels that the airlines are allowed to levy in April 2011 (per coupon) are $189 and $820 for short-haul and long-haul flights respectively. Compared with the corresponding levels in May 2009 (short-haul and long-haul levels being $51 and $239 respectively), they are $138 and $581 higher respectively.
(b) From April 2008 to March 2011, CAD made 16 written enquiries to the airlines, requesting more information in relation to their fuel surcharge applications. During the same period, the approved fuel surcharge levels for 80 applications were lower than those originally applied for. Since the relevant applications generally contain the airlines' commercially sensitive information, it is not appropriate for the Government to disclose the details.
(c) Levying fuel surcharges on top of airfares is a general international practice. CAD has no intention of requiring the airlines to include fuel surcharges in the airfares. At present, CAD approves fuel surcharge applications and announces the results on a monthly basis. It also publishes the approved fuel surcharge levels of individual airlines on its web page which are available to passengers. Moreover, passengers may enquire about the airfares and the fuel surcharges with relevant airlines or travel agents before they buy the air tickets.
(d) The Australian court judgment referred to in the question concerns a contractual dispute between an airline and a travel agent on the calculation of commission, and is not related to tariff applications under an air services agreement. As the mechanism and remuneration arrangements concerning the sale of tickets are a commercial matter between the airlines and the travel agents, it should be determined by the airlines and the travel agents. Hence, CAD will not require the airlines to pay a commission to the travel agents on the passenger fuel surcharges, as a condition for approving fuel surcharges.
Ends/Wednesday, April 13, 2011
Issued at HKT 16:07
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