What Happens to the Tourism Industry When Fuel Prices Go Up

Airfares may go up in March due to the fuel surcharge hike. This article looks into what is currently happening and its impact on local businesses.

The Civil Aeronautics Board (CAB) announced yesterday that it will hike the fuel surcharge next month. With that, airlines are expected to charge an additional PHP 201 to PHP 690 for domestic flights, and PHP 1053 to PHP 1827 for international flights. In fact, the fuel surcharge—or increase in jet fuel prices—was due to the higher demand for air travel, which went hand-in-hand with the opening of borders after countries decided to ease up on travel restrictions.

“The increase in jet fuel prices may be driven by the demand brought about by the reopening of other key markets which can also be taken with sheer optimism in terms of global economic recovery post-pandemic,” said Steve Dailisan, AirAsia Philippines head of communications. 

Despite the fuel surcharge hike, some low-cost carriers stated that they will still make air travel affordable. Xander Lao, Cebu Pacific President, said that the aforementioned local airline will still push through with their seat sale amid the uptick in fuel surcharge. He also encouraged the passengers to book as early as possible to still avail of the low fares. 

Moreover, Dailisan stated that he and AirAsia Philippines are confident that the fuel surcharge hike will not discourage Filipinos from booking and traveling, whether abroad or domestically. 

Revenge Travel Season

In the last three years, most, if not all Filipinos were forced to stay in their homes during the height of the pandemic. But now that COVID-19 restrictions are easing up, many Filipinos have immediately begun planning trips. This surge in travel bookings—amplified by being deprived of seeing the world for a long, long time—gave rise to the buzzword “revenge travel.”

In fact, this phenomenon is not just happening in the Philippines—but also around the world. Everyone is making up for lost time during the pandemic. With this, the travel and accommodation industry suddenly boomed.

Looking back during the first years of the pandemic, the same industry was heavily affected. For example, Philippine Airlines, the flag carrier of PH was reported to have laid off 2300 employees in 2021. Many hotels have also had to close down, either temporarily or permanently amid growing expenses and little to no profits coming in.

How it Affects Filipinos

Fortunately, people are gradually adjusting to the aftermath of the pandemic and they are more confident to travel. With this, revenge travel contributes a lot to local businesses. As travelers flock to a tourist destination, many locals are gaining income and employment. 

According to a report from Statista, “Revenue in the Travel & Tourism market is projected to reach USD 3714 million [around PHP 203.39 billion] in 2023.” Given these numbers, Filipino entrepreneurs can take advantage of this impressive growth in travel and tourism by creating businesses that cater to this audience. Examples include property rental, touring services, and food services, among others. 

Though the fuel surcharge will increase in March, it can be said that it is less likely that Filipinos will cease traveling. With revenge travel on the rise and local airlines like Cebu Pacific still offering affordable deals, Filipino travelers will continue to fly within or out of the country—hence contributing positively to the country’s tourism industry.