Jeju Air seeks fuel surcharge on Cebu service

by Jun Vallecera, BusinessMirror

Posted at Jan 08 2013 09:10 AM | Updated as of Jan 08 2013 05:10 PM

MANILA, Philippines - South Korea’s budget airline Jeju Air Co. Ltd. is seeking the imposition of a $40 fuel surcharge for passenger of its Cebu-Incheon service to offset rising operational costs.

The petition filed before the Civil Aeronautics Board (CAB) was filed about a month after Jeju Air started commercial flights between tropical Cebu and temperate Incheon in November last year.

Jet fuel accounts for more than half, and in many cases up to 60 percent, of a carrier’s operating costs.

Airline officials say labor costs are similarly expensive.

According to the CAB, Jeju Air filed the petition was set for public hearing two weeks from today, the airline having filed the petition on December 6, 2012.

Jeju Air also flies regularly from Manila to Incheon as well as from Clark.

No-frills airlines, also called low-cost carriers, often have tight margins and make money by offering tickets with carefully calibrated fare structures.

As fuel costs rise, low-cost carriers have no choice but to ask passengers to defray the rising cost of transport from one international destination to another by imposing a fuel surcharge.

Data-driven web sites like IndexMundi show the price of US jet fuel actually falling from $3.19 a gallon in September last year to just $2.99 a gallon as of January 3 this year.

In any case, fuel costs are some of the more volatile commodities there are, often requiring executives to hedge against the likelihood of an inordinate increase many months down the line.