Domestic airlines are likely to raise their jet fuel surcharges after the National Development and Reform Commission (NDRC) increased the price of jet fuel effective Wednesday, analysts said.
Fuel is about 40% of the cost of running a commercial airline.
According to related regulations on jet fuel surcharges, the jet fuel surcharges for flights on domestic routes with distances above 800 kilometers will be raised by RMB10 (US$1.50) to RMB80. The surcharges for routes with distances under 800 km will remain at RMB40.
iStock Analyst reported analysts as saying they expect the airlines to raise their jet fuel surcharges slightly to cover part of the additional cost from the fuel price hike.
One analyst calculated that after the fuel price hike, the three major Chinese airlines – Air China, China Southern Airlines and China Eastern Airlines – will see their costs rise by RMB600 million (US$90.53 million), RMB1 billion and RMB860 million, respectively.