【High Oil Prices】Cathay Pacific Cargo Fuel Surcharge Skyrockets 300%　Logistics Association Lashes Out: Airline Increase Unreasonable, Undermines Hong Kong Competitiveness

Tensions in the Middle East have caused international oil prices to rise rapidly recently. Several airlines in Hong Kong have announced significant adjustments to their fuel surcharge (CFS), sparking strong dissatisfaction from the Hong Kong Air Freight and Logistics Association (HAFFA), which calls on government regulators to intervene urgently to restore order.

Cathay Pacific recently announced adjustments to its freight fuel surcharges departing from Hong Kong. From March 20 to 31, short-haul rates will increase by 0.9 yuan per kilogram, a 289% rise to 3.5 yuan; long-haul rates will increase from 3.2 yuan per kilogram by 303% to 12.9 yuan.

HAFFA condemns: The increase far exceeds reasonable limits and is unfair

The Hong Kong Air Freight and Logistics Association believes that some airlines’ increases have already far exceeded reasonable limits, which is unfair and will inevitably cause heavy impacts on Hong Kong’s overall economy and livelihoods.

According to HAFFA’s monitoring, major airlines have increased long-haul fuel surcharges by more than four times, and short-haul routes have also seen nearly fourfold increases. Compared to the international crude oil price increase of about 30% to 40% during the same period, these near-instant and multiple-fold fee adjustments by airlines are clearly disconnected from actual operating cost increases.

A heavy blow to Hong Kong’s economy and livelihoods

Liu Haoran, chairman of HAFFA, describes the price hikes as reckless, not only shifting heavy burdens onto freight forwarders but also triggering a disastrous ripple effect, leading to uncontrollable surges in overall logistics costs. Ultimately, this huge additional expense will undoubtedly be passed on to end consumers, potentially causing supply chain instability and disrupting freight flow. This is undoubtedly a blow to Hong Kong’s economic arteries, a direct harm to public welfare, and a complete undermining of Hong Kong’s core competitiveness as an international logistics hub.

Urging the government to revoke the decision and restore fuel surcharge regulation

Liu Haoran states that HAFFA has insisted since 2016 on maintaining a government-regulated fuel surcharge mechanism. Abandoning regulation and liberalizing the market will inevitably lead to significantly increased operating costs and chaos in market order, severely weakening Hong Kong’s international competitiveness. The government ultimately insisted on implementing a liberalized fuel surcharge policy starting January 1, 2025, which he finds extremely disappointing and regrettable.

HAFFA emphasizes that, given the current chaotic market situation, it strongly urges relevant government regulators to immediately investigate and demand the government revoke its decision, restoring the government-regulated fuel surcharge mechanism to ensure fair market competition and prevent airlines from exploiting their market position and geopolitical crises for excessive profits, thereby safeguarding industry and public interests.

Consignor Committee: Surcharges seem driven more by profit motives

Recently, the Hong Kong Consignor Committee also expressed strong dissatisfaction with airlines’ recent announcement of substantial increases in freight fuel surcharges. Chairman Peter Hui called on airlines to provide clear explanations for their high charges, asserting that consignors have the right to understand the rationale behind such staggering increases.

The Hong Kong Consignor Committee believes that, without reasonable explanations, these surcharges appear more motivated by profit-seeking rather than genuine reflection of operational costs. They urge airlines to clarify under what conditions these surcharges might be reverted to previous levels. Hui states that airlines typically hedge against oil price fluctuations, and near-instant surcharge hikes are unreasonable.

Hui describes that consignors are also facing significant challenges in the current business environment. The recent sharp increase in surcharges will only worsen their operational difficulties and should not be used by carriers as an opportunity for disproportionate profit-making. The Hong Kong Consignor Committee calls on airlines to reconsider these increases.