Philippine travel agencies are optimistic that demand for domestic and international travel will recover as airline fuel surcharges continue to decline amid easing tensions in the Middle East.
The Philippines’ Civil Aeronautics Board (CAB) lowered the fuel surcharge on passenger flights to Level 12 from June 16 to 30, down from Level 13 during the first half of June.
Fuel surcharges are additional fees added to airfares to reflect changes in fuel prices.
The surcharge rate has been on a downward trend since May 1, reflecting softer jet fuel prices. However, surcharge levels remain significantly higher than before the Middle East conflict, when the CAB imposed a Level 4 surcharge.
Industry stakeholders hope the lower surcharge will make air travel more affordable and encourage bookings in the coming months.
“We are optimistic that the lower fuel surcharge rate and the easing of tensions in the Middle East will help boost travel demand,” Philippine Travel Agencies Association president Jaison Yang told TTG Asia on June 16.
Yang said the industry has experienced sluggish sales since May, a trend he expects to continue until mid-August. He added that travel demand could begin to recover in September.
According to Yang, higher airfares have discouraged many travellers, particularly affecting the MICE segment. Rather than cancelling trips altogether, many customers have opted to postpone their travel plans.
Princess Aila Macamay, a sales agent at Manila-based Discover Group, also observed a slowdown in bookings following the escalation of tensions in the Middle East.
She said enquiries that previously converted quickly into bookings became harder to close as travellers grew more cautious due to safety concerns. The company also recorded a decline in overall enquiries.
Macamay added that higher fuel costs squeezed travel agency margins, with Discover Group absorbing part of the increase in airfares after fuel prices rose unexpectedly.
The higher airfares also pushed up package prices. Macamay said a 15-day Europe tour package that previously cost around US$2,487 rose to about US$2,985 as airfare costs increased.
To minimise disruption, the company also sought alternative airline routings that avoided stopovers in Middle Eastern countries.
Despite the challenges, industry players remain optimistic.
“If we survived the pandemic, there’s no way we can’t survive this crisis,” Yang said. “During the pandemic, there was no movement, no tourism, virtually zero economic activity. But we survived.”
Macamay also expressed confidence that improving geopolitical conditions and lower fuel surcharges will support a gradual recovery in travel demand.
