Beijing raises domestic fuel prices 1.43%

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Published: August 3, 2012

The Chinese government has raised domestic jet fuel prices 1.43% to CNY6,820 ($ 1,079) per ton as international fuel prices stabilize.

Beijing has adjusted domestic jet fuel prices every month as costs fluctuate. Last month Beijing cut domestic fuel prices 9% to CNY6,724 per ton (ATW Daily News, July 3).

Fuel costs account for more than 40% of China’s big three carriers’ total operating expenses. China Southern Airlines, which operates 80% of its flights on domestic routes, could see its fuel costs increase by CNY249.6 million annually. Air China and China Eastern Airlines, which operate 70% of their flights on domestic routes, could see their annual fuel costs increase by CNY214.08 million and CNY221.17 million, respectively.

Chinese airlines are not expected to raise fuel surcharges as domestic fuel prices have not exceeded the required CNY250 per ton. MU and CA have received approval from Beijing to restart fuel hedging this year to offset rising fuel expenses.

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