Fuel surcharge tax scrapped

The Ministry of Finance has decided to suspend the collection of taxes on airlines' fuel surcharges in a move to alleviate the financial woes of domestic carriers.

The ministry said the suspension would be effective Jan 1 and continue untill the end of 2010. The tax rate on fuel surcharge now is 3 percent.

"The benefit is limited as the tax only accounts for a very small proportion of airlines' costs," said Mao Ang, analyst, China Galaxy Securities Co Ltd. "For listed carriers, it may see earnings per share going up by 0.01 cent."