Chinese Airlines To Scrap Fuel Surcharges

February 3, 2015

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Chinese carriers will this week scrap fuel surcharges for domestic flights for the first time since late 2009 after fuel costs fell below a government-set level.

Air China, China Eastern Airlines, China Southern Airlines and other carriers will abolish the surcharge from February 5, a spokeswoman for the Civil Aviation Administration of China (CAAC) said.

Like other Asian airlines, Chinese carriers had gradually cut the surcharge from late 2014 as oil prices fell to six-year lows.

The CAAC spokeswoman said the surcharge on domestic flights was directly linked to the fuel procurement costs of the local companies that supply airlines. The surcharge is assessed monthly and the authority decided to remove it completely after fuel procurement costs fell below the government's minimum level of CNY4,140 yuan per tonne.

Industry executives said the procurement costs had fallen to CNY3,783 yuan per tonne. Airlines could impose the surcharge again if these costs rise, they added.

Passengers hoping for cheaper fares over the Lunar New Year holiday week, however, will be disappointed as travel agents and airlines add a premium to tickets for this peak travel period.

(Reuters)