Fri, Nov 03, 2006 - Page 12 News List

CAL and EVA to reduce fuel surcharges

BLOOMBERG

China Airlines Ltd (CAL, 華航) and EVA Airways Corp (長榮) will cut their levies on overseas flights by 14 percent from Nov. 10, as jet fuel prices fall.

The airlines will cut their surcharges on short-haul flights, including to Hong Kong, to US$15 each way from US$17.50, the Ministry of Transportation and Communications said on its Web site late on Wednesday. The levy on long-haul flights to the US and Europe will fall to US$39 each way from US$45.50.

Asian carriers including Singapore Airlines are cutting their surcharges as the price of jet fuel falls. The lower levies may further squeeze margins at CAL and EVA, which both reported worse-than-expected third-quarter results.

The reduction is "a burden for us," CAL spokesman Johnson Sun (孫鴻文) said yesterday.

Previously, "the surcharges weren't able to fully reflect our fuel costs and now they're lower," he said.

Jet kerosene closed at US$70.65 a barrel yesterday in Singapore, 24 percent lower than the record high of US$93 reached on Aug. 8.

Singapore Airlines, the world's second-largest carrier by market value, cut levies by as much as 10 percent on Oct. 14.

CAL's third-quarter profit slumped 63 percent from a year earlier to NT$117 million (US$3.5 million), while EVA posted a loss of NT$1.47 billion in the period compared with a year earlier profit of NT$782 million.

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