China announces new pricing mechanism

China has introduced a new fuel surcharge pricing mechanism, China’s top economic planner announced. The National Development and Reform Commission (NDRC), together with the Civil Aviation Administration of China (CAAC), said in a statement on its website that the fuel surcharge will keep abreast with China’s jet fuel comprehensive purchasing costs. The new mechanism, which would take effect on November 14, 2009, aims to “help the airlines with fluctuating fuel prices”, as jet fuel costs usually account for 40% of the total costs of China’s airline companies, said the statement. According to the new mechanism, when jet fuel comprehensive purchasing cost is lower than 4,140 yuan (US$606) per ton, the benchmark price of jet fuel, airline companies should not charge a fuel surcharge. (November 13, 2009)