Rajan Wilcox
A fuel surcharge is an extra fee that airlines can collect on top of the base fare to balance their welfare and that of passengers when prices of essentials like jet fuel rise. TNT and UPS Philippines apply an index-based fuel surcharge to all shipments, which is adjusted weekly based on the US Gulf Coast price for kerosene-type jet fuel. In the Philippines, fuel surcharges vary by airline and flight type. For example, Cebu Pacific offered fuel surcharges ranging from PHP151 to PHP542 for a one-way domestic flight and PHP498.03 to PHP3,703.11 for a one-way international flight under Level 5, which is lower than Level 6 surcharges.
| Characteristics | Values |
|---|---|
| Definition | An extra fee that airlines collect in addition to the base fare to balance the welfare of both the airlines and passengers when prices of things essential to flight operations increase |
| Basis | The spot price for U.S. Gulf Coast (USGC) kerosene-type jet fuel as reported by the U.S. Energy Information Administration (EIA) |
| Adjustment Frequency | Weekly |
| Effective Day | Monday of each week |
| Lag | Two weeks |
| Example | The surcharge for the week of February 6, 2017, is based on the USGC Jet Fuel Price for the week of January 23, 2017 |
| Level 6 Range (PHP) | Domestic flights: 185-665; International flights: 610.37-4,538.4 |
| Level 5 Range (PHP) | Domestic flights: 151-542; International flights: 498.03-3,703.11 |
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What You'll Learn
Fuel surcharges for UPS
UPS uses an index-based surcharge for fuel that is adjusted weekly. The surcharge is based on the US Gulf Coast (USGC) price for kerosene-type jet fuel as reported by the US Energy Information Administration (EIA) for the week that is two weeks prior to the adjustment. The surcharge for a given week is based on the USGC Jet Fuel Price from two weeks prior. For example, the surcharge for the week of February 6, 2017, was based on the USGC Jet Fuel Price for the week of January 23, 2017.
The fuel surcharge applies to all regions of the world served by UPS. It applies to international transportation charges on UPS Worldwide Express Freight, UPS Worldwide Express Freight Midday, UPS Worldwide Express Plus, UPS Worldwide Express, UPS Worldwide Express Saver, and UPS Worldwide Expedited services. The surcharge also applies to the following accessorial charges (where applicable): UPS Next Day Air Early/UPS Worldwide Express Plus Charges.
The Domestic Air Fuel Surcharge will apply to charges for the following UPS services: Next Day Air Early, Next Day Air, Next Day Air Saver, 2nd Day Air A.M., 2nd Day Air, 3 Day Select, and Hundredweight Air services. The International Air-Export and International Air-Import Fuel Surcharge will apply to charges for the following UPS services: 3 Day Select from Canada, Worldwide Express Plus, Worldwide Express NA1, Worldwide Express, Worldwide Express Freight Midday, Worldwide Express Freight, Worldwide Saver, Worldwide Expedited, and Express Critical.
The International Ground Export Import Fuel Surcharge will apply to charges for UPS Standard to/from Canada and UPS Standard to/from Mexico. Fuel surcharges apply to all domestic and international transportation charges and certain other accessorial, value-added, and other charges. UPS Supply Chain Solutions service calculates express less-than-truckload (LTL) fuel surcharge amounts as a percentage of the net line haul charges. North American Air Freight fuel surcharges are assessed on each shipment on a per-pound basis.
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TNT's index-based fuel surcharge
TNT applies an index-based fuel surcharge to all shipments, which is based on the spot price for U.S. Gulf Coast (USGC) kerosene-type jet fuel as published by the US Energy Information Administration. This means that the surcharge is adjusted according to the fluctuations in the price of jet fuel. There is a two-week lag in the application of the fuel surcharge index, with changes to the surcharge coming into effect each Monday. For example, the surcharge for a particular Monday will be based on the average spot price reported two weeks prior. Information on the fuel surcharge for each week is typically available on the Friday before it comes into effect.
TNT reserves the right to change the fuel surcharge index and table without notice, and both the amount and duration of the surcharge are determined at TNT's sole discretion. The company also reserves the right to assess fuel and other surcharges on shipments without notice, and to amend the surcharge, including rates, duration, applicable areas, and other conditions.
International air freight fuel surcharge rates are determined by the origin and destination country of each shipment, with the minimum surcharge based on a weight of 100 kg. TNT's Air Freight Fuel Surcharge applies certain rates for all countries where Air Freight services are available, and these percentages and thresholds are subject to change without prior notice.
In addition to the fuel surcharge, TNT has implemented an Enhanced Security Surcharge to cover the costs of additional procedures, activities, and investments to safeguard customers' shipments. This surcharge is levied on all international Express, Economy Express, and Special Express shipments at a rate of €0.05 per kilo, subject to a minimum of €0.50 and a maximum of €10.00 per shipment. For air freight shipments, the surcharge is levied at a rate of €0.09 per kilo.
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Fuel surcharge for domestic flights
A fuel surcharge is an extra fee that airlines collect in addition to the base fare to balance the costs incurred by airlines and passengers when prices of things essential to flight operations increase. In the Philippines, the Civil Aeronautics Board (CAB) decides on the fuel surcharge, which is adjusted based on the US Gulf Coast (USGC) price for kerosene-type jet fuel. This surcharge is based on the price of jet fuel two weeks prior to the adjustment. For example, UPS uses an index-based surcharge that is adjusted weekly, with changes taking effect on Mondays.
For domestic flights in the Philippines, the fuel surcharge rates vary based on the level assigned by the CAB. Under Level 5, the fuel surcharge for a one-way domestic flight ranges from PHP151 to PHP542. This range is lower compared to Level 6, where the fuel surcharge for domestic flights falls between PHP185 and PHP665. These rates are subject to change based on fluctuations in jet fuel prices and the decisions made by the CAB.
It is worth noting that the fuel surcharge rates are not uniform across all airlines in the Philippines. Different airlines may have varying rates, and they must file their applications for imposing or collecting fuel surcharges with the relevant authorities, such as the Office of the Executive Director.
The fuel surcharge for domestic flights in the Philippines aims to strike a balance between the welfare of airlines and passengers. By adjusting the surcharge based on jet fuel prices, airlines can manage their operational costs, while passengers benefit from more affordable air travel, especially with the decreasing trend in fuel surcharges observed in the country.
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International flight fuel surcharge
An international flight fuel surcharge is an extra charge levied on top of the cost of airfare to ostensibly cover the cost of airline fuel. The levying of these surcharges is up to the airline operating the flight. Fuel surcharges are generally not a concern for tickets purchased with cash, as airlines are required to advertise the full price, including the base fare, taxes, and any fuel or other surcharges.
However, for tickets purchased with miles or points, airlines may apply fuel surcharges on top of the mileage cost of the ticket. For example, a British Airways business class flight from Los Angeles (LAX) to London Heathrow (LHR) may incur a fuel surcharge of around $1,700 to $1,900 for a round trip. Similarly, Japan Airlines (JAL) applies a fuel surcharge on all international passenger tickets, which is reviewed and revised bimonthly. For tickets issued in June and July 2025, the fuel surcharge for itineraries originating in the Philippines is USD 8.
To determine whether a specific airline or route charges fuel surcharges, it is advisable to experiment with sample bookings on the airline's website. If a cash cost is added to the required airline miles, it may be possible to avoid these surcharges by booking through a different airline or using alternative rewards points or miles. For instance, United Airlines does not charge any fuel surcharges on its flights or those of its partners, while American Airlines does not levy fuel surcharges when using another airline's miles to book a flight on their airline.
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Airlines' welfare and passengers' balance
The US Department of Transportation (DOT) has proposed new rules to require airlines to compensate passengers and cover expenses for controllable delays and cancellations. This includes covering amenities such as meals, hotels, and rebooking. This is a significant step towards protecting passengers from financial losses due to airline-caused disruptions. While this is a positive development for passenger rights, it's important to consider the impact on airlines' welfare.
Airlines operate in a highly competitive and cost-intensive industry, where fuel costs are a significant expense. In the Philippines, fuel surcharges are adjusted weekly based on the US Gulf Coast (USGC) price for jet fuel, as per UPS. Fuel surcharge rates are applied to various UPS services, including international transportation charges. These fuel surcharges can significantly impact the operational costs of airlines, affecting their profitability and long-term sustainability.
To maintain a balance between airlines' welfare and passenger protection, a comprehensive approach is necessary. Firstly, transparency is key. Airlines should disclose all-inclusive pricing, including fuel surcharges and other fees, upfront during the ticket purchasing process. This enables passengers to make informed decisions and understand the cost breakdown. Secondly, airlines should focus on efficient fuel management and cost-optimization strategies. By improving fuel efficiency and negotiating fuel prices, airlines can mitigate the impact of fuel price fluctuations on their operations.
Additionally, governments play a crucial role in supporting the aviation industry. Policy interventions, such as providing fuel subsidies or implementing tax breaks, can help offset the burden of high fuel costs on airlines. This, in turn, can contribute to maintaining competitive airfare prices and ensuring the accessibility of air travel for passengers. By encouraging innovation and the adoption of sustainable practices, governments can further assist airlines in reducing their fuel dependence and improving their overall efficiency.
In conclusion, achieving a balance between airlines' welfare and passenger protection requires a collaborative effort. While it is essential to uphold passenger rights and provide compensation for disruptions, it is also vital to recognize the financial challenges faced by airlines, especially regarding fuel costs. Through transparent practices, efficient fuel management, and government support, a sustainable aviation industry that benefits both airlines and passengers can be fostered.
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Frequently asked questions
A fuel surcharge is an extra fee that airlines may collect in addition to the base fare to balance the costs incurred by airlines and passengers when prices of things essential to flight operations increase.
The fuel surcharge in the Philippines is calculated based on the US Gulf Coast (USGC) price for kerosene-type jet fuel as reported by the US Energy Information Administration (EIA). The surcharge is adjusted weekly and changes are effective on Mondays.
Under Level 5, the fuel surcharge for a one-way domestic flight ranges from PHP151 to PHP542. For a one-way international flight, the surcharge ranges from PHP498.03 to PHP3,703.11, depending on the distance.
