Flying's cheaper as fuel fees trimmed
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Shanghai Daily, September 6, 2011
Flying will become cheaper as passengers will pay less after Chinese airlines begin to trim fuel surcharges on domestic routes from today as jet fuel prices decline.
Fuel surcharge on domestic routes longer than 800 kilometers will be cut to 140 yuan (US$21.92) per passenger from the previous 150 yuan, while the surcharge on other routes will remain at 80 yuan, according to online travel agency Ctrip.com.
Last Thursday, the National Development and Reform Commission, China's top economic planning agency, cut ex-factory jet fuel price to 7,610 yuan a ton from 7,725 yuan. This in turn benefitted the airlines as they were able to buy jet fuel at 7,670 yuan a ton instead of 7,785 yuan from the China National Aviation Fuel Group Corp, the country's jet fuel supplier.
The fuel surcharge, a major measure for airlines to pass on costs to passengers, is linked with fuel costs to better reflect price fluctuations.
It has been the first decrease in the fuel surcharge so far this year as the NDRC began adjusting ex-factory price for jet fuel monthly starting on August 1 to better reflect the movement in global oil prices.
"The monthly adjustment of ex-factory jet fuel price better reflects market changes and ensures more reasonable fuel surcharges," said Shao Jihong, head of the air ticket department at Ctrip.com.
The jet fuel cost, accounting for about 40 percent of the airlines' total costs, is calculated at the weighted average of ex-factory jet fuel price and imported price of fuel.
The monthly adjustment is seen as a prelude to reforming the pricing mechanism of retail gasoline.
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