China will reduce fuel surcharges on domestic flights by up to 75 percent, starting December 25 of this year, the top economic planning agency, the National Development and Reform Commission (NDRC) said on Friday.

For flights more than 800 kilometers, the surcharge will decline to 40 yuan (US$5.6) from 150 yuan per ticket. Fees on routes shorter than 800 km will fall from 80 yuan per ticket to 20 yuan.

The move will reduce travel costs and boost demand, said a Sinolink Securities analyst.

However, lower passenger surcharges reduce airline's benefits from lower fuel costs. A more than 30-percent reduction on domestic jet fuel prices went in to effect midnight Thursday.

According to calculations by Sinolink Securities, lower passenger surcharges could cost the airline industry 22 billion yuan in earnings next year.

The NDRC also lowered the benchmark prices for gasoline on Thursday to 5,580 yuan per tonne, down 14 percent, while that for diesel was adjusted to 4,970 yuan per tonne, down more than 18 percent.

Shares of airliners gained across the board as of 2:40 PM. China Southern Airlines added 3.05 percent to 3.72 yuan. China Eastern Airlines advanced 4.94 percent to 4.46 yuan. Air China was up 1.31 percent to 4.63 yuan.

(Xinhua News Agency December 19, 2008)