A major supplier of aviation oil for China's domestic airlines announced on Tuesday that the sale price of the fuel products will increase by 720 yuan (US$105) per ton starting in July, the Shanghai Securities Journal reported.

The price hike came after the National Development and Reform Commission, China's top economic planning agency, raised the factory price of aviation kerosene by 1,500 yuan per ton on June 19. This will boost the whole sale price of the fuel by 23 percent to reach 8,020 yuan per ton.

Meanwhile, starting July 1, passengers who buy tickets for domestic flights have to pay extra fuel charges after the Civil Aviation Administration of China (CAAC) approved increased jet fuel surcharges amid rising world oil prices.

The newspaper learned from airlines sources that the latest price hike is mainly exercised on comprehensive purchase cost differences, which, together with the factory price and the price difference between purchases and sales, composes the overall aviation oil price.

Every price adjustment since 2007 was carried on quarterly comprehensive purchase cost differences based on fluctuations in the international market of the previous quarter.

Analysts believe China Southern Airlines and Shanghai Airlines will bear the brunt of the fuel price hikes as the former operates the most domestic flights and the latter's fuel consumption volume is relatively larger than others.

(CRIENGLISH.com July 9, 2008)