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China cuts jet fuel price 4% as crude oil cost falls

(Agencies)
Updated: 2009-10-10 13:56

China, the world's second-largest oil consumer, is lowering the price of jet fuel by about 4 percent as crude oil costs declined, said the National Development and Reform Commission (NDRC), the nation's top economic planner.

The price refiners charge wholesalers for jet fuel will drop by 200 yuan ($29) tomorrow to 4,870 yuan a metric ton, the NDRC said today in a statement on its website.

“The cut is in line with the monthly change in crude oil prices,” said Li Lei, a Beijing-based analyst at China Securities Co. “The domestic fuel-pricing system has become mature and of benefit to the airlines.”

China adjusts fuel prices when oil costs change more than 4 percent over 22 straight working days, under a pricing formula introduced in December. The government cut gasoline and diesel prices by as much as 3 percent on September 30 after crude oil in New York fell 2 percent since the previous adjustment on September 1.

Lower jet-fuel prices will help ease airlines' costs as they struggle to reduce mounting debt and survive an economic slowdown that has curbed demand for air travel.

Related readings:  Rising jet fuel will help airlines narrow losses  China may reduce jet fuel surcharges by year-end  China cuts Q4 jet fuel price by nearly 6.9%

Jet fuel accounts for more than 40 percent of domestic airlines' operating costs, according to the Civil Aviation Administration of China. Domestic airlines including China Southern Airlines Co, the nation's largest carrier, consumed 12 million tons of jet fuel in 2008, according to the regulator.

Chinese airlines are allowed to hedge fuel for international routes, while prices for domestic routes are fixed.