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Chinese airlines reapply fuel surcharge after 3 years
Published on: 2018-06-15
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5b1740ada31001b8b9ba1739Chinese carriers including Air China and China Eastern Airlines Corp have applied a fuel surcharge to domestic routes from June 5, the first time they have done so in three years as oil prices begin to rise.
 

Air China said in a statement on its website that it would begin charging 10 yuan per leg from zero previously. China Eastern said the same, but added that children and disabled military personnel would be exempt.
 

Spring Airlines, Hainan Airlines and Kunming Airlines also announced similar surcharges.

20180605115600 1994The same surcharge will apply to routes that are both less or more than 800 kilometers long, the airlines said. Previously, they applied different surcharges for different route lengths.

20180605115600 8550Chinese airlines scrapped fuel surcharges for domestic flights in 2015, after oil prices sank to six-year lows and pushed fuel purchase costs to below a government-set level.
 

But the companies do not hedge fuel buys like many of their oversees peers, which has left them vulnerable as oil prices begin to rise. Brent crude LCOc1 is trading just over $75 a barrel, up almost 50 percent from a year ago.

china eastern airlinesAir China’s 2017 profit fell short of analysts’ forecasts due to higher-than-expected operating expenses including that of fuel, costs for which it said jumped 29.2 percent to 6.42 billion yuan over the year.
 

Airline executives meeting in Sydney this week said the industry’s profitability was being threatened by fuel costs that were rising much faster than ticket prices, prompting some to lock in fuel hedges, lower capacity and raise fares.

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