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The Chinese government on Wednesday announced a cut of 20 percent in the fuel surcharge on domestic flights from later this week, days after a reduction in the wholesale price of aviation kerosene.

 

The National Development and Reform Commission (NDRC), the national economic planning agency, said the 100-yuan (US$12.9) surcharge per air passenger on domestic flights of or beyond 800 km would be reduced to 80 yuan (US$10.3) from Sunday.

 

The agency also said the 60-yuan (US$7.7) surcharge per passenger on flights of less than 800 km would be cut to 50 yuan (US$6.4).

 

In a joint circular issued by NDRC and the General Administration of Civil Aviation of China (CAAC), the surcharge for children, police and soldiers injured on duty will drop from 30 to 20 yuan (US$2.6) for short flights, and from 50 to 40 yuan or flights of or more than 800 kilometers.

 

"The government authorities at all levels should strengthen their supervision over the air carriers to ensure the enforcement of the surcharge cut and safeguard the interests of air passengers," said an official with the NDRC price bureau, who refused to give his name.

 

The government reduced the aviation kerosene wholesale price by 90 yuan (US$11.6) per ton on Jan. 14 as the international crude oil price had been declining since last September.

 

Crude oil prices fell to a 19-month low on Tuesday. New York's main oil futures contract, light sweet crude for delivery in February, fell 1.78 dollars to close at 51.21 dollars a barrel.

 

To counteract the huge rise in costs of the aviation industry brought about by high oil prices, the government twice raised the fuel surcharge last year, almost tripling the surcharge it imposed on Aug. 1, 2005.

 

CAAC head Yang Yuanyuan said earlier that the combined profits of the nation's airlines surged to 4.73 billion yuan (US$608 million) from January to November 2006, 83 percent up from the same period the previous year, a result mainly of falling oil prices and the surcharge.

 

Yang estimated the airlines carried a total 160 million passengers last year. Officials believed they gained at least seven billion yuan (US$900 million) from fuel surcharge in the past two weeks.

 

The record low international crude price and earlier speculation of a government injection of ten to 20 billion yuan (US$1.28 billion to 2.56 billion) boosted the stocks of China's three major state-owned airlines in the Shanghai Stock Exchange.

 

China Southern Airlines Co. Ltd. and China National Aviation Holding Company recorded a double-digit surge in their share prices this month.

 

Liu Shaoyong, general manager of China Southern, announced Tuesday that the company was set to report its first profit in five years with with a revenue of 46.54 billion yuan (US$5.97 billion).

 

Liu declined to give the figures saying that they were still being examined by government departments.

 

Analysts said the fuel surcharge cut would reduce the profit margin of the already struggling industry, but the declining oil price was likely to offset it.

 

(Xinhua News Agency January 18, 2007)