Chinese Raise Jet Fuel Prices

THE CHINESE Government has significantly raised domestic jet fuel prices for a second time this year to CNY 6,840 ($1,044) per ton, a 7.9% increase in response to escalating oil prices.  Fuel costs comprise more than 40% of Chinese airline’s operating expenses and as a short-term solution most Chinese carriers have announced increased fuel surcharges on domestic routes.
China’s three largest airlines are again considering fuel hedging, but must obtain government approval first after Air China and China Eastern Airlines took big hits on hedging contracts in 2008.