Airlines hike fuel surcharges

China.org.cn, April 8, 2011

Most Chinese mainland airlines will raise fuel surcharges today after the government increased the price of jet fuel by 500 yuan a ton to 6,840 yuan yesterday.

Surcharges will rise to 60 yuan from 50 yuan for flights of?no?longer?than?800 kilometers and to 110 yuan from 90 yuan for?long haul?flights of longer than 800 kilometers.

Apring Airlines, a Shanghai-based budget carrier?led the increase by announcing a higher fuel surcharges yesterday, followed by Air China, China Eastern Airlines and other major domestic carriers, according to China's leading travel service provider Ctrip.com.

The National Development and Reform Commission (NDRC),China's top economic planning body,?yesterday lifted the gasoline price by 500 yuan a ton, diesel by 400 yuan a ton and jet fuel by 500 yuan a ton after the?international crude oil prices reached their highest level in two-and-half years following unrest in Arab countries.

"The jet fuel increase will cost Air China 730 million yuan, China Southern Airlines 1.24 billion yuan, and China Eastern 1.06 billion yuan," said Huang Jinxiang, an analyst at Sinolink Securities Co.

"The fuel surcharge increase will?bring in an additional?560 million yuan for Air China in revenue this year, 910 million yuan for China Southern and 730 million yuan for China Eastern,"?he said.

In 2009, the NDRC,?introduced a mechanism that links fuel surcharges on domestic air routes with fuel costs to better reflect price movements. The jet fuel cost is calculated at the weighted average of ex-factory price jet fuel and imported price of fuel.