LCQ14:Passenger fuel surcharges collected by airlines

     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 (June 15):


     It has been reported in the press that the passenger fuel surcharges (surcharges) collected by airlines with the permission of the Civil Aviation Department (CAD) have increased for nine consecutive months since September last year, with surcharges for long-haul and short-haul flights increased by as high as 134% and 143% respectively, which far exceed the increase in fuel prices during the same period by over 50%.  In this connection, will the Government inform this Council:

(a) of the reasons for the increase in surcharges far exceeding that of fuel prices during the aforesaid period;

(b) as it has been reported that since June this year, a maximum surcharge of $1,124 per coupon is collected for long-haul flights, while the amount for short-haul flights is $236, whether CAD can explain in detail the factors considered in vetting and approving applications for increasing surcharges and the method by which the amounts of such surcharges are calculated (please explain clearly the calculation method which is considered to be reasonable by CAD, even if the commercial information of airlines cannot be disclosed, together with the figures actually calculated or projected by CAD, so as to address the concerns of the public);

(c) what policies and measures it has to prevent individual airlines to shift other costs and expenses, which are not related to surcharges, to consumers by increasing surcharges, so as to protect the interests of consumers;

(d) as the Travel Industry Council of Hong Kong estimates that conflicts between passengers and travel agencies are very likely to increase as a result of the surges in surcharges, what policies the Government has to help passengers understand that travel agencies are unable to influence CAD's vetting and approval of applications from airlines for increasing surcharges, and as travel agencies do not receive any commission or benefit from surcharges, the surges in surcharges will not augment the profit margins of travel agencies;

(e) as some airlines have ceased to collect surcharges since 2007, and the amounts of surcharges may also vary among different airlines, what policies and means the Government or the Consumer Council has to help enhance public awareness of such market phenomena, so that they can make wise choices; and

(f) as some travel agencies have pointed out that surcharges take up an increasingly large percentage of airfares, which may probably mislead passengers and render them difficult to know the actual airfares on one hand, and pose an increasingly big impact on passengers' expenses on the other, whether the Government will explore imposing a requirement that airlines should not shift other costs and expenses, which are not related to fuel prices, to consumers again in the name of surcharges when the percentage of surcharges in airfares exceeds a certain level, and must incorporate the surcharges in airfares so that passengers know clearly the exact fares they need to pay when considering their travel or business trips, so as to avoid confusion; if not, of the reasons for that?



(a) and (b) 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 considering the fuel surcharge applications, CAD will consider the impact of the changes in aviation fuel prices on the operating costs of the airlines.  For instance, when the aviation fuel prices go up, the operating costs of the airlines will increase, and the approved fuel surcharges will only allow the airlines to partially recover the increase in the operating costs, rather than being linked to the percentage change in the fuel prices.  During the period from June 2010 to May 2011, CAD considered and approved fuel surcharge applications 12 times, of which nine involved upward adjustments to the fuel surcharges, and three involved downward adjustments.  This reflected the changes in the fuel prices over the same period.  

(c), (d) and (e) In considering the fuel surcharge applications, CAD will not consider costs and expenses which are not related to the changes in the fuel prices, and the approved fuel surcharges will only allow the airlines to recover part of (not all) the increase in the operating costs due to the changes in the fuel prices.

     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.

(f) Levying fuel surcharges on top of airfares is a general international practice.  CAD does not intend to require the airlines to include fuel surcharges in the airfares, nor does it intend to do so when the fuel surcharges exceed a certain percentage of the airfares.

Ends/Wednesday, June 15, 2011
Issued at HKT 12:13