China to raise airline fuel surcharge from Nov 5


BEIJING – China will allow domestic airlines to increase their fuel surcharges from November 5 to counter the pressure of crude oil price hikes on the local aviation industry, the official Xinhua news agency reported.

The passenger fuel surcharge will be allowed to rise from 50 yuan per passenger for flights within a distance of 800 kilometers to 60 yuan. For flights beyond 800 kms, the fee will rise from 80 yuan to 100 yuan.

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The newly approved surcharges will take effect from November 5, Xinhua said, quoting a joint circular issued by the National Development and Reform Commission (NDRC), the country’s economic planner and the General Administration of Civil Aviation (CAAC).

China’s announcement of the hikes in the prices of gasoline, diesel oil and jet kerosene by 500 yuan per ton from this month are expected to further boost local airlines’ fuel expenses, which already accounted for 44 pct of their total costs in September, Xinhua said, citing sources with the CAAC.

Ma Xiaoli, an analyst with CITIC Securities, was quoted as saying that with oil prices up 100 yuan per ton, China Eastern Airlines will see its net profit fall by 220 mln yuan, while profit for China Southern Airlines (NYSE:ZNH) may drop by 250 mln yuan and that for Air China, by 180 mln.

(1 usd = 7.45 yuan)