Wed, Sep 21, 2005 - Page 10 News List

CAA approves fuel-surcharge increase

INEVITABLE The Civil Aeronautics Administration said yesterday that rising oil prices have necessitated a hike in fuel surcharges on international flights, to protect carriers


The aviation regulator yesterday approved local airlines' request to raise the fuel surcharge on international flights, as fuel prices have shot up by 75 percent from the time the current surcharge was levied.

Starting Oct. 4, passengers taking short-haul international flights, or flights departing from Taiwan to other Asian countries, will be charged US$12.50 per flight, and those traveling outside Asia will be charged US$32.50 per flight, the Civil Aeronautics Administration (CAA) said yesterday.

Local carriers have been applying for permission to raise fuel surcharges since last year, but the CAA suspended the proposal at the time because the government didn't want to further push up consumer prices, Billy Chang (張國政), the administration's director-general, said yesterday.

Yet with the price of international jet fuel having rocketed from US$48 per barrel in July last year -- when the carriers were granted permission to impose a fuel surcharge of US$5 on short-haul flights and US$13 on long-haul flights -- to US$84 per barrel this month, the hike in the surcharge has become inevitable. The hike is necessary to keep Taiwan-ese carriers operating, Chang said, citing prices announced by state-run Chinese Petroleum Corp (中油).

The approval was accelerated after Delta Air Lines Inc and Northwest Airlines Corp, two major US carriers clobbered by soaring fuel costs, filed for bankruptcy protection last week.

"We don't want to see any of our airlines go out of business," Chang said.

Affected by skyrocketing fuel costs, China Airlines (華航), Taiwan's largest carrier, last month slashed its financial forecast from NT$1.25 per share to NT$0.88 per share, or pre-tax earnings from NT$4.4 billion to NT$3.08 billion.

Smaller rival EVA Airways Corp (長榮航空) also reported that after-tax earnings dropped by 53 percent for the first half of the year from the same period last year, despite sales climbing by 8 percent in this period.

The rates are valid through Apr. 3 next year should the price of jet fuel remain at US$70 to US$80 per barrel, Chang said. If the average price goes down to US$60 to US$70 per barrel for two consecutive months, the surcharge will be lowered to US$10 on short-haul flights and US$26 on long-haul flights, he said.

If the average price further declines to US$50 to US$60 per barrel for two straight months, the surcharge will be cut to US$7.50 and US$19.50 respectively, he said.

The CAA also gave its approval for carriers operating domestic routes to hike their ticket prices by an average 3.2 percent starting Oct. 19. The administration does not allow fuel surcharges to be levied on domestic flights.

After the adjustment, passengers flying from Taipei to Taitung will pay 5.3 percent more than at present. Tickets for Taipei to Kaohsiung flights -- the busiest domestic route -- were increased by 3.6 percent, 3.7 percent and 4.5 percent respectively, depending on the carrier.

The hikes are still within the price cap set by the CAA on Jan. 10 this year based on a jet-fuel price of NT$13.63 per liter, Chang said. The price has reached NT$19.47 per liter this month, he said.

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