Jet fuel price rises for fourth time
(Shenzhen Daily/Agencies)
Updated: 2005-10-17 09:12

China's oil supplier raised the price of jet fuel for the fourth time this year Oct. 1, adding to the expenses of Air China Ltd., China Southern Airlines Co. and the nation's State-run carriers.

The retail price of jet kerosene used on overseas flights rose 9.4 percent to 5,710 yuan (US$706) a metric ton, Air China's Beijing-based head of investor relations Rao Xinyu said. Fuel price for domestic routes was kept unchanged at 5,220 yuan a ton, she said.

The move may shield domestic carriers and air travelers from the 77 percent surge in jet fuel cost in the world market, analysts said. Air China and other Chinese airlines were hit particularly hard in the first half by record oil prices because they were barred from collecting surcharges on domestic routes and could only buy oil from government suppliers at higher prices.

"Passengers on international flights can afford to pay more, so the government is shifting the higher cost on to them first,'' said Guotai Junan Securities (Hong Kong) Ltd.'s analyst Alan Lam.

China's latest jet fuel price, equivalent to US$89 a barrel, is higher than spot prices in Singapore. Jet fuel rose 1.8 percent to US$79.27 a barrel yesterday in Singapore, after surging to a record US$85.36 a barrel Oct. 3, according to the Platts oil-pricing service.

This may be the first time China's oil supplier is charging different prices for fuel used on overseas and domestic routes. Bian Hui, a spokesman for China Aviation Oil Holding Co., the country's biggest supplier of jet fuel, declined to comment.

China raised jet fuel prices by 6.1 percent in July to 5,220 yuan a ton, from yuan 4,920.

The new price applies to routes that airlines operate from China to overseas destinations, Air China's Rao said. Airlines could still buy fuel on the open market when their aircraft are operating outside of China, she said.

Cao Yushu, a spokesman for the National Development and Reform Commission, China's top planning agency in Beijing, declined to comment. Zhong Ning, a spokeswoman for the General Administration of Civil Aviation of China, the industry regulator, did not pick up five calls to her office.

Global airlines will post a 2005 industry loss of US$7.4 billion, 23 percent more than expected, due to record oil prices, the International Air Transport Association said in September. Airline fuel bills may rise 54 percent from last year to US$97 billion in 2005, based on an average price of US$57 a barrel for Brent crude oil, the Montreal-based industry group said.

Chinese airlines received permission to collect ticket surcharges on Aug. 1 from the aviation regulator.