Higher HK airfares on horizon as fuel surcharges kick in from November

Hong Kong airlines given the green light to levy fuel surcharge

Hong Kong’s Civil Aviation Department (CAD) is lifting a 22-month suspension on fuel surcharge, allowing airlines to make their own commercial decisions on whether to levy a surcharge and the amount to charge.

Cathay Pacific and Cathay Dragon have swiftly responded to the change and announced surcharges – HK$146 (US$18.60) and HK$652 for shorthaul and longhaul flights from Hong Kong respectively, for tickets issued or re-issued from November 2, 2018 onwards.

Hong Kong airlines given the green light to levy fuel surcharge on passengers

The surcharge is on a per flight sector basis irrespective of fare type, and will be revised on monthly based on fuel prices.

Budget airline HK Express, meanwhile, has yet to reveal details of a surcharge, but states that the amount will be based on market conditions.

According to a CAD spokesman, the decision is based on a study about international trends and practices on fuel surcharges regulation. The initial findings, released in 2017, concluded that there was a global fuel surcharge liberalisation trend to enhance competition and recommended that the CAD take a similar approach.

If an airline wishes to levy a passenger fuel surcharge (PFS) as part of the final price, it will be required to clearly show the itemised charge, as is the case with other “must pay” elements.

Lotus Tours’ managing director and COO Ken Ng said the PFS is a global practice now amid fluctuating oil prices, and airlines are likely to exercise discipline in setting the levy amount as they are supervised closely by many bodies.

“For sure, airfares will jack up about 30 per cent and this will dampen the frequency of shorthaul trips, but not in long term as fuel surcharge is not something new,” commented Ng.

Likewise, Sunflower Travel Service, general manager, Johnny So reckoned any impact would be short-term.

“Hong Kongers love travel so much. In fact, airfares in Hong Kong are pretty low when compared with other global destinations like Europe, plus the surge of LCCs have driven airfares down. Frankly, the fuel surcharge is widely implemented across the globe and even Macau hasn’t stopped charging.”

On whether there has been a scramble to purchase flight tickets before the surcharges kick in, So said he has seen an uptick in Cathay Pacific group bookings. As for FITs, there has not been a marked increase in bookings, although he is not discounting the possibility of a surge closer to implementation date.

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