Hong Kong To Reintroduce Airline Fuel Surcharge

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Back in 2016, when international oil prices fell drastically, Hong Kong banned all Carrier Imposed Surcharge on flights originating in Hong Kong. Since then, Hong Kong has joined a small number of regions such as Japan and Brazil that does not allow Airline Fuel Surcharge. However, the Civil Aviation Department of Hong Kong announced yesterday that they will be lifting the ban while introducing a new requirement for airlines to display air prices.

Summary

Update: These new rules only apply to direct airlines pricing, OTAs like Expedia are not affected.

Currently, more than 120 Airlines have service to and from Hong Kong. In January 2016, CAD imposed a notice banning Passenger Fuel Surcharge. Since then, airlines are only allowed to levy surcharges on flights into Hong Kong or on cargo flights. Airlines since then has included all surcharges as part of the base fare.

Civil Aviation Department of Hong Kong has just announced a new set of rules regarding airline pricing in Hong Kong and that the regulation on passenger fuel surcharge is also going to be lifted as part of the new rules.

For tickets issued on and after the 1st of November, airlines are allowed to levy a Passenger Fuel Surcharge. Any ticket issued before that date, including those traveling after 1st of November, will still be under the current set of rules. To add to that, tickets reissued after 1st of November due to rebooking may face the new surcharges.

New Requirements for Price Display

There is also a new requirement for airlines on how they display airfares. Also effective from the 1st of November, airlines will have to clearly display all “must pay” costs upfront. “Must pay” costs are defined as all costs in order for the passenger to board the flight. That includes the base fare, fuel charges, all taxes and all airport specific fees such as security fees. This new pricing requirement will mostly impact low-cost carriers that tend to hide the taxes and airport fees in order to display a lower cost upfront.

It also strengthens the requirement that airlines have to display a full breakdown of fares. That included the re-introduces fuel surcharge. For example, the price display of Eva Air, in this case, will not be acceptable under the new rules. While Cathay Pacific’s price display will be good to go.

Unacceptable: Eva Air Combining Base Fare and Fuel Charge

Acceptable: Cathay Pacific Displays Base Fare and Fuel Charge Separately

Another interesting change is that in-flight add-ons must now be offered in an “opt-in basis”. Which means that add-ons such as flight insurance can no longer be part of your airfare unless you click to purchase them. Historically some airlines automatically include such add-ons in your tickets (For example Singapore Airlines’s infamous auto insurance inclusion) unless you click on an option to opt out. Such practice will no longer be allowed under the new rules.

All airlines have to follow the new regulations regarding price display. No matter if they impose carrier surcharges or not. This is surely a positive change that will benefit consumers, as airline prices will be more transparent.

Impact on Award Bookings

Form 2016, airlines have included its Passenger Fuel Surcharge as part of the base fare for tickets issues from Hong Kong. Which means for award tickets, passengers only need to pay the airport taxes and fees. With the new changes, award booking will now incur a Passenger Fuel Surcharge separated from the base fare. Which most likely will need to be paid for even on award bookings. This is surely a negative change, but it is still interesting to see what the development can be. Since airlines have already included the Fuel Surcharge in base fares historically, it is unsure what changes will they make to the current pricing mechanism.

British Airways Charges a Ludicrous Fuel Surcharge on Award Tickets

However, I strongly recommend you to make award bookings before the new changes take effect. Especially on Airlines such as British Airways and Asiana, that historically are notorious with their surcharges.

Conclusion

Although this is surely s negative change, the new transparent fare display is a good change. Transparency in fare structure can lead to more competition and lower prices as well. I believe that Hong Kong may re-impose regulations on Fuel Surcharges when oil prices fall once again. With that being said, I think Airlines should have the freedom to impose surcharges as they wish. As consumers, we always have the choice to do business with airlines we like at the end of the day.

The new rules for price display closely mirror those introduced in the European Union. In 2015. the EU rules that airlines have to display the final price of a ticket at all times. This has been the case for EU-based airlines since. As of now, only Japan and Brazil has a ban on passenger surcharges. It is interesting to see how this change in Hong Kong might impact regulators in these countries.

You can find CAD’s press release via this link here.

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