PIA applies fuel surcharge on all sectors

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Abbas Ali
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PIA applies fuel surcharge on all sectors

Post by Abbas Ali »

BY IQBAL MIRZA

KARACHI (July 06 2006):
To grapple with the fallout of the burgeoning fuel prices on its profitability, Pakistan International Airlines (PIA) has raised fuel surcharge on domestic and international sectors, effective from May 1.

Known as YQ charges, these will apply on tickets issued for selected sectors and classes. These charges will, however, not apply on economy class of domestic sectors for tickets issued in Pakistan.

PIA has also imposed an additional surcharge of $5 per ticket, effective from July 1, as fiscal surcharge on all PIA international and domestic tickets. This surcharge will be added in the applicable market selling fares. While updated fares are being filed in the system, all stations have been asked to use phase IV (manual pricing) till such time as the fares are updated. This surcharge will be collected as part of the fare on all sales from July 1. The logic behind imposing this surcharge has not been explained.

While the YQ charge will be applicable only on 'economy plus' and club class on domestic sectors, it will be applicable on all classes on the international sectors.

The YQ charges on the following domestic sectors for 'economy plus' one way will be as follows: Islamabad-Karachi Rs 785; Islamabad-Lahore Rs 420; for Islamabad-Quetta, Karachi Lahore, Karachi-Multan, Karachi-Quetta, Lahore-Quetta and Lyallpur (Faisalabad)-Karachi the YQ charges will be Rs 730.

For business class, the one way YQ charges will be: Islamabad-Karachi Rs 1250; Islamabad-Lahore Rs 500; Islamabad-Quetta Rs 900; Karachi-Lahore Rs 1150; Karachi-Multan Rs 750; Karachi-Quetta Rs 760; Lahore-Quetta and Lyallpur (Faisalabad)-Karachi the charges will be Rs 850.

YQ charges will not apply on the sectors other than the one mentioned above. For the international sectors, the YQ charges for all classes will be: USA/Canada/UK/Europe $20; and Gulf/Saudi Arabia/Far East/Regional $10.

Subject charges shall be mentioned on ticket separately, with YQ code. Filing of YQ charges in the system is already in process and will be updated accordingly. Charges will not be applicable on tickets issued prior to May 1, 2006.

While the imposition of fuel surcharge is understandable, the additional surcharge of $5 as fiscal surcharge is questionable and needs explanation from PIA management. At a time when the travel trade and airlines, including PIA, have expressed concern and are agitating against the levy of 15 percent federal excise duty (FED), the imposition of fuel surcharge from May 1 and fiscal surcharge from July 1 by PIA seems out of tune and badly timed.

The worst sufferer would undoubtedly be PIA as people, to avoid 15 percent FED, would prefer getting their tickets issued from abroad as the FED is applicable only on "the return tickets issued from abroad to passengers travelling to Pakistan." But the tickets issued from abroad for journey commencing from Pakistan remain absolved from this levy.

The FED would have taken effect for journey on or after zero hour July1, even on tickets issued prior to the said date, but following agitation by the travel trade its implementation has been deferred till August 1.

The Board of Airline Representatives in Pakistan (BARIP) had raised its concern over the imposition of FED and highlighted its implications on the airline industry as well as the unnecessary burden on passengers, which may lead to a disastrous impact on the international airlines operating in Pakistan.

BARIP comprises PIA, Emirates, Air France, Etihad Airways, Alitalia, Biman Bangladesh Airlines, British Airways, Cathay Pacific, Gulf Air, Iran Air, Kenya Airways, KLM, Lufthansa, Aalaysia Airlines, Qatar Airways, Saudi Arabian Airlines, Singapore Airlines, Sri Lankan Airlines, Swiss International Airlines, Syrian Arab Airlines, Thai Airways International and Turkish Airways.

The members of the BARIP board were of the opinion that "the tax will not only adversely affect the struggling tourism industry it will also have a negative impact on the business community whose passengers will be left in a quandary over the application of the tax." The confusion over the tax is compounded when the said excise duty will have to be calculated at the time of departure on fares applied from the country of origin. This may potentially lead to commotion at all international airports throughout the country.

OTHER POINTS RAISED BY BARIP BOARD WERE:

-- Collection, reporting and monitoring based on a percentage is impractical. Airline fares, as per global trends, are updated regularly based on market conditions and seasonality, making FED percentage volatile.

-- The impossibility to read the tickets that are issued in Europe and the USA due to the special coding, without a face value on the ticket, and a collection of 15 percent from such tickets would be an impossible task.

-- With the limited amount of cash that passengers carry now owing to the cash ceiling as per the local customs regulation (PK Rs 3000), it may be inconvenient for the passenger to carry the amount stated by the Central Board of Revenue (CBR).

-- Interlining sector which are tickets issued by other airlines and other documents and happen to connect with carriers from Pakistan to Gulf, Far East and then they connect with their airlines to beyond points which would be difficult to areas such tickets.

-- Illegal practice, as per IATA policy, of collecting tax from passengers who have utilised one direction of their journey which can be a legal case against all such airlines who would be collecting such taxes at the airports at the last minute.

BARIP suggested that the proposed excise duty should be fixed in terms of absolute value rather than a percentage to avoid confusion of calculation at the time of departure.

The proposed excise duty should only be applicable on tickets sales made in Pakistan and no other airline services, except passenger ticket sales, should be liable for the proposed excise duty.

Source: Business Recorder
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