Regulator to mull letting carriers hike fuel surcharges

The Civil Aeronautics Admini-stration (CAA) said it would consider letting the nation's air carriers hike fuel surcharges again, but it set no timetable on when it might make a decision.

China Airlines and EVA Airways Corp confirmed yesterday that they have submitted applications to raise fuel surcharges on international flights.

CAA Vice Director Lee Chung-Roung (李仲榮) said that the administration would consider the applications because rising oil prices had jacked up the carriers' operating costs. A more precise policy would be determined after consulting with domestic airlines and after considering price adjustments by foreign airliners, he said.

The administration would also take fuel prices set by the Chinese Petroleum Corp (CPC) into consideration, Lee said.

Taiwan's carriers began adding fuel surcharges to international flights in July 2004. They charged US$5 for short-haul and US$13 for long-haul flights. At that time, CPC's jet fuel was US$48 per barrel.

Last October, the nation's six carriers were granted permission to hike surcharges to US$12.50 for short-haul flights and US$32.50 for long-haul flights. To reduce the impact of the price increase on consumers, the CAA mandated that the surcharge could not be raised further before April 3.

A press statement from the CAA yesterday said that the average fuel price for the first half of last year reached approximately US$67.82 a barrel.

By the second half of the year, the average price had jumped to US$80.77 a barrel. The average fuel price this month has been as high as US$85.37 a barrel, far higher than the base price for prior estimates.

"Rising costs on jet fuel have greatly eaten into our company's profits. It's been a huge burden for the aviation industry across the board," said Johnson Sun (孫鴻文), spokesman for the nation's largest carrier, China Airlines, in a phone interview.

He said that for every US$1 hike in jet fuel, operation costs climb by NT$550 million (US$17 million), based on China Airlines' estimates.

EVA Airways also stressed that it has been under great pressure from the escalating cost of jet fuel.

Oil prices now account for 40 percent of EVA's operating costs, up from 20 to 25 percent before fuel prices shot up.

Those hikes ate up more than NT$3 billion in profits last year, Eva Airways president Chang Kuo-wei (張國煒) said last November.