China cut fuel costs for the first time in almost two years after crude oil fell below $36 a barrel. The price of petrol was lowered by 14%, diesel by 18% and jet fuel by 32%. The drop was beyond airlines’ expectation, said an Air China spokesman.
News that the government would reduce fuel surcharges on domestic flights buoyed the air industry with shares of China Eastern Airlines, China Southern Airlines, Shanghai Airlines, Hainan Airlines and Air China up 4.94%, 2.77%, 2.09%, 1.43% and 1.09%, respectively.
The National Development and Reform Commission and Civil Aviation Administration of China said surcharges would be reduced from RMB150 to RMB40 per passenger on flights longer than 800 km and from RMB80 to RMB20 for those shorter than 800 km.
China Eastern Airlines is expected to receive second capital injection of RMB10 billion, reports Xinhuanet.com quoting a source close to company executives.
Luo Zhuping, secretary to the president at China Eastern Airlines, didn’t deny new funding but was uncertain of the final amount.
China Eastern Airlines said last week that it would receive RMB3 billion from the issuing of new shares by its parent company.
Source: JLM Pacific Epoch