Central government officials are looking at giving the green light to the mainland's three major airlines to establish a jet fuel oil surcharges mechanism that would give them more flexibility to raise passenger surcharges as oil prices keep rising.

"The State Development and Planning Council and Civil Aviation Administration of China (CAAC) started their consultation in the middle of August with some airlines about the setting up of the mechanism," Li Youqiang, managing director of finance at Air China, told The Standard Monday. Li said it would be "good news" for airlines if the mechanism was finally set up.

Meanwhile, a spokesman for China Eastern Airlines said while the company has not met with the regulator, the mechanism would be "positive" for the Shanghai-based carrier.

Currently, the mainland's "Big Three" - the other is Guangzhou- based China Southern Airlines - are required to seek approval from CAAC before increasing fuel surcharges. The new mechanism, aimed at helping airlines to improve their margins, would give them more autonomy in imposing surcharges.

The three major carriers recently received approval to raise surcharges for the second time this year on domestic flights. Each passenger flying less than 800 kilometers will pay a surcharge of 60 yuan (HK$58.68), up from 30 yuan. Those flying farther will pay 100 yuan, up from 60 yuan. The move came as the price of aviation fuel jumped 50 percent since March to more than 5,800 yuan per tonne.

Air China chairman Li Jiaxiang said last week that his airline received 1 billion yuan in surcharges in the first half, and would gain another 2 billion yuan in the second half.

The carrier's fuel bill in the first six months rose 40 percent to 7.1 billion yuan, accounting for 37 percent of operating expenses, up from 32 percent a year earlier.

South China Securities analyst Andy Cheng said the new mechanism is slightly positive for the airlines, but continued deep ticket discounting would offset any recovery.

"The beneficial impact of the new mechanism will depend on the pricing power of the airlines," Cheng said. "If they are looking for more market share, they would not increase surcharges even if oil prices are going up."