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High airfares due to fuel surcharge concerns Duterte

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President Rodrigo Duterte expressed his concern about high airfares after the Civil Aeronautics Board approved the reimposition of fuel surcharges because of rising oil prices in the global market.

Duterte brought up the high airfares during a meeting with Cabinet members and local officials on the effects of Typhoon Ompong in Tuguegarao.

The President asked, ”By the way, the airfare, is it controlled by airlines? Are we controlling it? Which is which?”

Transportation Secretary Arthur Tugade pointed out that the airfares are determined by the CAB.

The President regularly travels to Davao City, complained that the airfares are very costly now. The Transportation Chief explained to the President that the Philippines does not have its own fuel and has to import from other countries.

For his part, Energy Secretary Alfonso Cusi said about 50 percent of the Philippines’ energy needs is dependent on oil while the rest are sourced from renewable and indigenous sources.

Cusi explained,“We import oil so we are working on projects in the Philippine Rise and the West Philippine Sea for our oil sufficiency.”

 Tugade said he has been crafting a matrix that would compare airfare charges with oil prices. He said, ”We want it to be axiomatic. If the oil prices drop and you do not lower fares, you can be subjected to sanctions or penalty.”

Just last week, the CAB approved the imposition of fuel surcharges, an act that was disallowed three years ago. In a resolution, CAB said aviation fuel prices have risen to $85.16 per barrel as of April 2018 from $63.66 per barrel in the same period last year.

Because of the resolution, passengers of one-way domestic flights may have to pay P34 to P769 while passengers bound for other countries may have to pay P163 to P9,860 more, depending on the destination and jet fuel costs.

The applicable fuel surcharge would be determined based on the two-month average of jet fuel MOPS (Mean of Platts Singapore which is the average of a set of Singapore-based oil product price assessments published by Platts) prices in its peso per liter equivalent, and would be fixed for two months, CAB said.

During the same meeting, the President described as a “tragic development” the absence of a vessel that travels directly from Davao to Manila. He said many people from the province who are carrying food items are experiencing inconvenience because of the overcrowding in ships.

Tugade noted that the major component of food costs is transportation.

The Transportation Secretary explained, “Two things are being done: We provide refrigerated containers for use of farmers and fishermen to preserve their products…We also talk to shipping companies, if it is possible to impose special tariffs on perishable goods instead of tariffs dictated by the market. This can help reduce the costs of transporting goods which in turn will help lower prices in the market.”

Duterte urged his cabinet members to continue in searching for means to reduce the prices of food in the market.

Most of the people blame the TRAIN for the price increase because of the excise tax added on all petroleum products which would inevitably affect all goods that uses transportation.

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