Fuel Price Cut Helps Chinese Airlines
By Irene Shen, Shanghai Daily | Apr. 06, 2007
China cut jet fuel prices by 90 yuan (US$11.65) a ton starting April 1, to reflect earlier oil price declines, according to domestic airlines.
"It's a positive move for China's airlines," said Luo Zhuping, company secretary of China Eastern Airlines Corp, in a telephone interview with Bloomberg News on April 5.
Luo didn't elaborate on how much the company may gain from the cost reduction.
China has cut jet fuel prices three times this year. It reduced the jet fuel price by 180 yuan on January 1, followed by a decrease of 90 yuan two weeks later.
"It's very likely that the government will consider to lower fuel surcharges as well," said Alan Lam, an analyst at Guotai Jun'an Securities in Hong Kong. "That may erode the carriers' gains from lower fuel costs, but not all."
China Southern will benefit most, according to Lam. The company may save about 230 million yuan, he said.
Chinese carriers will buy jet fuel at about 5,900 yuan a ton from China Aviation Oil Supply Corp after the price cut. The state-owned company is the nation's monopoly jet fuel distributor and sets retail prices at all airports in China.