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Chinese airlines to scrap fuel surcharge from Feb 5

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Chinese airlines are set to scrap their fuel surcharges for domestic flights for the first time since late 2009, two airlines executives told Reuters, even as oil prices start to climb away from six-year lows this week.

[BEIJING] Chinese airlines are set to scrap their fuel surcharges for domestic flights for the first time since late 2009, two airlines executives told Reuters, even as oil prices start to climb away from six-year lows this week.

Passengers heading home for family reunions in the upcoming Chinese New Year holiday, nevertheless, may still have to pay a premium to board flights during the peak travel period.

Starting from Feb 5, Air China, China Eastern Airlines Corp Ltd, China Southern Airlines Co Ltd and other carriers will cancel the fuel surcharge for domestic service, two airlines executives said. The move follows consecutive cuts in the surcharge since late 2014. "We've got notification from the regulator and informed our ticket agencies already," an executive with China Southern told Reuters.

Spring Airlines Co Ltd was also aware of the latest round of fuel fee cuts, an executive there said.

A spokesman with the Civil Aviation Administration of China confirmed the fuel surcharges will be scrapped. No public announcement has been made.

The last time Chinese carriers cut the fuel surcharge was on Jan. 5, when the rate for domestic routes longer than 800 km was slashed by half to 30 yuan, (S$6.50) with the fee for shorter routes down to 10 yuan from 30 yuan.

Still, the cheapest one-way ticket from Shanghai to Beijing is 553 yuan on Feb 19, the first day of the week-long Chinese New Year, up from 370 yuan on Feb 3, according to Ctrip.com, a Chinese online travel company.

Many other Asian airlines slashed fuel surcharges last month, but they may raise base ticket prices to protect profit margins, according to aviation experts.

Australia's Qantas Airways Ltd, the latest Asian carrier to eliminate the surcharge, said it was raising fares as oil was not cheap enough to offset the impact of competition on international routes.

BLOOMBERG