Chinese Airlines To Raise Fuel Surcharges

Chinese airlines including China Southern Airlines will raise domestic jet fuel surcharges as much as 50 percent from Tuesday to offset pressure from high oil prices, an aviation industry web site said on Monday, citing regulators.

Regulators approved an increase in the domestic jet fuel surcharge to CNY80 yuan (USD$11.67) from CNY60 for flights of 800 kilometres (497 miles) or less, and to CNY150 from CNY100 for longer distances, it said.

Regulators had raised the country's ex-refinery jet fuel prices by CNY1,500 per tonne from June 20, delivering a double-whammy to domestic airlines also reeling from a drop in passenger volume that began in May, when southwest China was hit by a devastating earthquake.

China's big airlines, which also include Air China and China Eastern Airlines, have since been seeking permission from Chinese authorities for a surcharge increase.

"The hike in the fuel surcharge is helpful but we might still suffer as air traffic demand is falling and airlines have to offer discounts to attract customers," said Luo Zhuping, a spokesman for China Eastern.

He did not indicate whether the move would help the carrier to post a profit for the full year, which would depend on several factors including government subsidies, if any, for airlines' assistance to earthquake rescue efforts.

Several airline executives have said that a slowdown in the global economy and strict airport security checks nationwide in the run-up to the Beijing Olympics were also hurting international travel both into and out of China.

China Eastern Chairman Li Fenghua told reporters earlier on Monday, however, that the carrier expected to be profitable in the first half due to robust traffic from January to April.

(Reuters)