Domestic airlines may raise their fuel surcharges to offset higher costs following an increase in China’s jet fuel prices, analysts said.
China Business News reported the total annual costs of China’s three major airline giants, China Southern Airlines, Air China and China Eastern Airlines, will increase about RMB 2.5 billion (US$380.6 million) owing to the jet fuel price rise.
China raised jet fuel, gasoline and diesel prices by RMB350 (US$53.22) per metric ton.
Shen Xiaofeng, a senior industry analyst at Changjiang Securities said that at present, “the fuel bill accounts for about 30% to 40% of the total cost for Chinese airline companies, therefore the fuel price hike will put great pressure on them.”
The English People’s Daily Online quoted Shen as saying, “Based on the official calculation formula for fuel surcharges, Chinese airline companies could raise it to RMB90 (US$13.70) per passenger on domestic flights of, or beyond, 800 kilometers from the current RMB70 (US$10.64).”