Thu, Feb 01, 2007 - Page 12 News List

Airlines expected to cut fuel surcharge


People planning to spend the Lunar New Year holidays overseas could pay less for their tickets, as local airlines are expected to cut fuel surcharges by 17 percent from Feb. 10, in line with declining oil prices.

"We will adjust the fuel surcharge in accordance with the mechanism set by the Civil Aeronautics Administration," Eric Lin (林司忠), a public-relations official at EVA Airways Corp (長榮航空), the nation's second-largest carrier, said yesterday.

Long-haul flights

The mechanism stipulates that if the average price of jet fuel in January and February is US$80 per barrel, the fuel surcharge for long-haul international flights can be cut to US$32.50 per flight from US$39.

As for short-haul international flights, or flights departing from Taiwan to other Asian countries, the surcharge can be reduced to US$12.50 per flight from US$15.

The administration is set to announce its decision on whether it will adjust the fuel surcharge or not today, after state-run Chinese Petroleum Corp (CPC, 中油) announces its jet fuel price, said Chen Tien-shih (陳天識), director of the administration's Air Transport Division.

CPC's jet fuel price last month was US$85.80 per barrel, meaning that the price this month should be US$74.20 or below to reflect the cut in fuel surcharge, Chen said.

Singapore Airlines, the world's largest carrier by market value, announced on Monday that it would lower its fuel surcharge by as much as 11 percent. Qantas Airways lowered its fuel surcharge by US$5 on Jan. 16, in reaction to the 25 percent drop in jet fuel costs since August.

Thai Airways and other carriers are also set to lower the rates.

Affected by the high fuel costs, China Airlines Ltd (華航), the nation's largest carrier, saw earnings for the first nine months of last year fall by 75.7 percent to NT$245.04 million (US$7.44 million), or NT$0.07 per share, on sales reaching NT$88.85 billion.

Last year, China Airlines report sales increased 16.52 percent to NT$121.93 billion.

The carrier had yet to make public its financial report for the fourth quarter of last year, but in a filing to the Taiwan Stock Exchange yesterday it said that its earnings for the last quarter exceeded NT$800 million, buttressed mostly by an increase in business passengers.

During the January to September period last year, EVA Airways saw accrued net losses of NT$2.32 billion, or NT$0.63 per share, on sales of NT$69.95 billion. For the whole last year, EVA reported its sales had grown 6.69 percent to NT$93.9 billion.

Oil prices

The two carriers are expected to see better earnings this year as oil prices drop.

China Airlines and EVA Airways, along with four smaller carriers, are also likely to make a profit from direct charter flights between Taiwan and China during the Lunar New Year holiday.

Shares of China Airlines declined 0.64 percent to close at NT$15.45 on the Taiwan Stock Exchange yesterday, while EVA Airways lost 1.38 percent to close at NT$14.3.

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