Domestic airfares rise as Chinese airlines hike fuel surcharges
Chinese mainland airlines raised fuel surcharges of their domestic routes Wednesday ahead of an expected increase in retail oil prices on September 10.
Air China and Xiamen Air said they would raise their fuel surcharges to 70 yuan($11.02) from 50 yuan for journeys shorter than 800km, and to 130 yuan from 100 yuan for those above because of a rise in international jet fuel prices, the South China Morning Post reported. The increases end a three-month trend of falling surcharges, which came after airline companies raised fuel surcharges for their international routes on Saturday.
Rising global aviation fuel prices were the major reason behind the increases, analyst said. West Texas Intermediate crude oil prices rose 13.6 per cent in the past two months after falling below the $100 per barrel benchmark in May, while Brent crude oil rose 17.1 per cent over the same period.
The country’s domestic jet fuel prices have risen by more than 700 yuan per tonne since Saturday, wiping out profits at the nation’s airline companies, as fuel expenses account for more than 40 percent of their total operating costs, the China Daily said.
China Southern Airlines Limited (NYSE.ZNH, 600029.SH, 1055.HK), the country’s largest airline by fleet size, posted its first-half net profit plunged 83.7 percent to 449 million yuan ($71.3 million) from a year earlier, since high fuel costs and foreign-exchange losses.
And Air China Ltd. (0753.HK), another flagship carrier, reported its first-half net profit dropped 74 percent to 1.06 billion yuan ($168 million) year on year with the same reason.
However, an analyst with the mainland’s largest portal of energy prices C1 Energy expected international oil prices to fall again by the end of this month before the American presidential election, according to the South China Morning Post.
Meanwhile, airlines and aircraft manufacturers are actively pursuing plans to replace traditional fossil fuels with renewable biofuel, the report said.
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