Passengers flying on domestic routes will have to pay higher fuel surcharges from today (May 26) as airlines seek to offset the rising fuel costs.
Fuel surcharges on routes longer than 800 kilometers rose to 140 yuan (US$20.44) from 90 yuan, and those on shorter routes climbed to 80 yuan from 60 yuan.
It is the second increase after the National Development and Reform Commission, China’s top economic planner, raised the ex-factory price for jet fuel by 500 yuan a ton to 6,840 yuan on April 7.
“Airlines raised fuel surcharges because of a higher procurement cost, which is calculated at the weighted average of ex-factory price jet fuel and imported price of fuel,” said Li Lei, an analyst at China Securities Co.
“Generally, airlines absorb 20 percent of the increased cost and passengers pay the remaining 80 percent,” Li said.
In 2009, the NDRC introduced a mechanism that links fuel surcharges on domestic air routes with fuel costs to better reflect price movements.
The current fuel surcharge level is the second highest on record. In July 2008, fuel surcharges reached a record 150 yuan on routes longer than 800 kilometers and 80 yuan on shorter routes when the benchmark Brent crude oil price hit US$147.5 a barrel.
However, Brent crude settled at US$112.53 per barrel on the ICE Futures Exchange on May 24.