Excise tax on oil products may result to airfare hike

FILE PHOTO: Cebu Pacific airplane

MANILA, Philippines – Executive director of the Civil Aeronautics Board (CAB), Carmelo Arcilla said the imposition of an excise tax on petroleum products may soon affect the prices of airline ticket fares.

For this to happen, he noted that airline companies need to file first their petitions for a fare increase, which will be decided upon by the CAB.

“As a regulatory agency, we will continue to monitor the situation and we will not allow the airlines to raise fares even before they pay their excise tax under the TRAIN law,” CAB Dir. Carmelo Arcilla said.

Arcilla believes the airline firms might request for an increase in their base fare, and not their surcharge.

He said this is because they could not still impose higher surcharges after CAB suspended it in December of 2014.

The CAB Chief explains that since the excise tax will have an impact on jet fuel, airline companies might seek an increase in their base fares.

“The nature of the surcharge is that it is temporary, but if we are talking about excise tax then maybe it will be an increase in fare,” Arcilla said.

Meanwhile, the Department of Energy (DOE) notes the excise tax will only have a minimal effect on jet fuel prices.

DOE said there will only be a 3-centavo increase per liter of jet fuel.

“There will only be an increase of P0.37 centavos and we are no longer in the 2nd and 3rd tranche. Compared to the other products, it is the lowest,” Oil Industry Management Bureau Director Atty. Rino Abad said.

According to airline companies, they are currently studying the extent of the impact of the excise tax on airfares.

Cebu Pacific said it is now computing the excise tax’s impact. The airline company, however, notes the weakening of the value of Peso still has more impact on airfare than the imposition of excise tax on jet fuel.

Meanwhile, some Filipinos are already complaining although there has been no increase yet in airfares.

“Too bad for Filipinos if their salary is not much,” said frequent flyer, Gloria Santos.

 

For airline passenger, Elain Saligumba, “It seems it will not be good for us.”

The Civil Aeronautics Board advises regular travelers to book their flights early and to wait for promos in airline tickets to save money.  – Mon Jocson | UNTV News & Rescue

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