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Following is a question by the Hon Tam Yiu-chung and a written reply by the Secretary for Transport and Housing, Professor Anthony Cheung Bing-leung, in the Legislative Council today (December 9):
Question:
It has been reported that international crude oil prices have been falling continuously since June last year from about US$110 per barrel to the recent price of below US$50 per barrel. However, some airliners still levy passenger or cargo fuel surcharges at present. In this connection, will the Government inform this Council:
(1) whether it knows the bases and principles adopted by airlines for determining the levels of their fuel surcharges; of the criteria and considerations based on which the Civil Aviation Department (CAD) vets and approves fuel surcharge applications; the annual average rates of fuel surcharge adjustments in the past three years, and how such adjustment rates compared with the rates of fluctuations in international crude oil prices during the same period;
(2) given that international crude oil prices have been falling continuously for the past year or so, of the reasons why the CAD has still approved individual airlines to levy fuel surcharges; and
(3) whether it has studied the levels of fuel surcharges currently levied by major airliners overseas; if it has studied, of the details, and whether such levels are roughly the same as those levied in Hong Kong; if they are not roughly the same, of the reasons for that?
Reply:
President,
My reply to Hon Tam Yiu-chung's question is as follows:
(1) and (2) Fuel surcharges are part of aviation tariff which allow airlines to partially recover the increase in operating costs due to fluctuation in fuel prices. In accordance with the existing bilateral air services agreements, airlines shall consider all relevant factors including operating costs and passenger interests in determining their tariffs, and shall only levy the tariffs with the approval of the relevant aeronautical authorities. When scrutinising fuel surcharge applications, the Civil Aviation Department (CAD) will take into account the justification provided by the airlines and other relevant factors including the impact on their operating costs due to the changes in aviation fuel price and other market considerations, etc. At the same time, the CAD would also consider whether the fuel surcharge levels are reasonable, making reference to, inter alia, international fuel surcharge levels.
The movement trends of fuel surcharges match that of international fuel price in general. Fuel surcharges have decreased with the price of international fuel prices in the past three years. The changes in passenger and cargo fuel surcharges in the past three years as well as a comparison with the changes in international fuel prices are set out in Table 1.
At present, many airlines are still collecting passenger and cargo fuel surcharges. In December this year 68 airlines applied and were approved by the CAD to levy passenger fuel surcharges. Airlines may levy passenger fuel surcharge at or lower than the level approved by the CAD based on their respective commercial considerations.
(3) Currently, the short haul and long haul passenger fuel surcharges levied in Hong Kong are respectively $25 and $112 maximum per passenger; the short haul and long haul cargo fuel surcharges levied are respectively $1.4 and $2.8 per kilogram. We reviewed the fuel surcharges levied by 28 major overseas airlines in November 2015. The short haul and long haul passenger fuel surcharges levied on average stood at about $230 and $970 per passenger; whereas that for cargo stood at about $6.1 and $6.8 per kilogram respectively. The passenger and cargo fuel surcharge levels in Hong Kong are on average lower than that levied on major routes in other regions and countries. The CAD will continue to monitor international practices in this regard and review our policy on fuel surcharges.
Ends/Wednesday, December 9, 2015
Issued at HKT 13:00
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