Chinese carriers at Beijing International. By Rob Finlayson

The Chinese government cut domestic jet fuel prices to CNY7,503 ($1,174) per ton, down 2.2% from CNY7,670 in September, the second price reduction this year (ATW Daily News, Sept. 9).

Fuel costs comprise more than 40% of Chinese carriers’ operating expenses. China Southern Airlines, which operates 80% of its flights on domestic routes, could see fuel costs reduced by CNY440.5 million annually because of the change.

Air China and China Eastern Airlines, which operate 70% of their flights on domestic routes, could see annual fuel costs cut by CNY373.7 million and CNY384.1 million, respectively.

Since July, Beijing has made monthly adjustments to domestic fuel prices based on fluctuating international fuel prices. 

With the cut in domestic jet fuel prices, Chinese carriers are reducing fuel surcharges correspondingly. China’s big three carriers are reportedly considering restarting fuel hedging, but first must receive government approval.