Rocketing Fuel Prices Incur Heavy Losses on Domestic Airlines
Posted on: Thursday, 21 July 2005, 09:00 CDT
Rocketing fuel prices incur heavy losses on domestic airlines
BEIJING, July 20 (Xinhua) -- The Chinese civil aviation industry, which remained unscathed in the aftermath of the 9/11 terrorist attacks in 2001, is expected to suffer losses of more than 400 million yuan (about 48.2 million US dollars) over the first six months.
Citing earning forecasts released by major airlines, Wednesday's Beijing Daily said the China Eastern Airlines, China Southern Airlines, Hainan Airlines, Shanghai Airlines and Shandong Airlines have all predicted massive declines on their first-half earnings.
Hainan Airlines, for instance, has predicted a year-on-year decline of 50 percent in both net profits and per share earnings.
Air China, the only airline company confident it will see profit, acknowledged that operation costs are higher than ever and promised to announce detailed statistics in its interim report scheduled for early September.
The major culprit for the industry's declining profits, said the paper, has been the continuous rise of fuel prices.
After two consecutive hikes between January and June, China's fuel prices have reached 4,920 yuan (some 600 US dollars) per ton, witnessing a combined increase of 800 yuan.
From January to May, domestic airlines suffered aggregated losses of 340 million yuan, statistics from the China Civil Aviation Administration (CCAA) reveal. Last year, however, spurred by brisk market demand and a 25 percent growth in air ticket sales, the whole industry raked in a combined earning of 8.69 billion yuan.
Given that fuel expenditure has become the most crucial factor in the operation costs of the civil aviation industry, some domestic airlines made a vain proposal that the CCAA resume the imposition of additional fuel charges on passengers.
The proportion of fuel expenditure in aviation operation costs was 22 percent between 2001 and 2002. This year, however, it is as high as 32 percent.
Strained by rocketing fuel prices, the entire world's civil aviation industry is estimated to suffer aggregated losses of 6 billion US dollars this year, said the article.
Source: Xinhua News Agency - CEIS
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