Airlines raise fees on hike in fuel costs

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Air China and Air Macau will raise the fuel surcharges from December 1 on routes linking the Chinese mainland and Macau to US$27.50 from US$25 per person to counter rising jet fuel costs.

The rise comes after major airlines, such as Air China, China Eastern Airlines and Hainan Airlines, increased fuel surcharges on domestic routes in late October to 70 yuan (US$10.55) from 40 yuan per passenger for routes longer than 800 kilometers and to 40 yuan for shorter distances from 20 yuan.

Airlines took this action after the National Development and Reform Commission, which controls fuel prices, on October 25 authorized state oil firms to raise factory-gate prices for jet fuel to 5,690 yuan a ton from 5,470 yuan to reflect price gains in global crude markets.

Fuel costs are the biggest component of an airline's expenses, accounting for more than 40 percent of total costs.

Based on their 2009 earnings reports, China Southern Airlines, Air China and China Eastern Airlines consumed 3.31 million tons, 3 million tons and 2.6 million tons of kerosene last year, respectively.

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