Passengers flying from Hong Kong will no longer have to pay fuel surcharges, following the collapse in oil prices.

In one of the biggest impacts of the oil price fall for Hongkongers, the Civil Aviation Department (CAD) said the fuel levy for passengers on outbound flights was to be scrapped as it was no longer necessary. The surcharge will be suspended indefinitely from February 1.

"In view of the fact that aviation fuel prices in the past months have greatly reduced and stabilised to a reasonable level and that the corresponding fuel surcharges have been greatly reduced, the CAD considers that the levying of passenger fuel surcharges is not warranted," a spokeswoman said on Wednesday.

Passenger fuel surcharges allowed airlines to partially recover the increase in operational costs due to fluctuations in aviation fuel prices.

Travellers booking air tickets from February 1 will see the benefits of lower-cost flights, but no refunds are expected to be given to existing bookings.

Leading travel agency Flight Centre has called earlier on Wednesday for the surcharge to be scrapped amid the low oil prices.

David Fraser, the travel agency's Greater China managing director, said: "While it is great that fuel surcharges have been reduced, the bigger question is why do they still need to exist. With fuel prices now relatively low, why can't they be scrapped entirely?"

No other industry was able to pass one of its main operating costs on to customers as a surcharge, he said.

Fuel surcharges on outbound Hong Kong flights had fallen to HK$24 for short-haul destinations and HK$109 on long-haul services, a cut of 70 percent from the start of last year. The charges fell to levels not seen since January 2005.

Stripping out fuel surcharges, Flight Centre said it saw just a 1 percent reduction in the average airfare in the past 12 months, indicating prices could come down further. The fall is at odds with global trends as major airlines engage in a price war after passing on fuel savings to passengers.

Flight Centre noted "great deals" from Hong Kong last Christmas by British Airways, Lufthansa and Air Canada, with prices as low as HK$5,000.

"We will continue to see airlines and the travel industry promote good value airfares to attract customers," added Fraser.

Cathay Pacific said the historically low fuel surcharge was "good news for passengers".

Residents are responding to cheaper flights with 11 percent more Hongkongers flying in and out of Hong Kong International Airport.

Hongkongers however are not seeing the full benefits of lower oil prices from motoring.

The Automobile Association said petrol pump prices were not falling fast enough while airfares were falling only fractionally as a barrel of oil last Monday hit just US$28.

Ringo Lee Yiu-pui, vice-president at the Automobile Association, urged the government to bring the price of petrol down.

"If the fuel price drops, of course Hong Kong will enjoy the savings but the timing is delayed. If fuel costs increase, companies will quickly mark up the price. It's a big problem," he said.

Around 40 percent of the retail price of petrol is government tax.

Prices at the pumps are currently hovering around HK$14 per litre, according to Consumer Council data, with half the price made up of taxes.

Separately, GlobalPetrolPrices.com continues to rank Hong Kong as the most expensive city for petrol at US$1.81 a litre compared to the global average of US$0.97.

A spokesman for the Consumer Council said it "is natural for consumers to expect a reasonable decrease in the petrol price".

The watchdog and the Competition Commission, armed with the power of the competition law, are both undertaking a review of the car fuel industry and will report their findings later this year.

The Competition Commission said it noted "public concerns about oil prices" not benefitting consumers.

Esso, one of the big five providers of petrol, said its pump prices were "trending in line with the product cost" as factors such as land, labour costs and taxes remained disproportionately high.