Cathay Pacific Airways was notified by the Civil Aviation Department of Hong Kong today that it is one of 10 airlines that have gained approval to reduce their passenger fuel surcharges.

Effective from 1 February 2007, for a two-month period, the passenger fuel surcharge will be reduced to US$13.60 (HK$106) for short-haul services in South and North East Asia and US$56.20 (HK$438) for long-haul services.

The current surcharges are US$14.50 (HK$113) for short-haul services and US$59.70 (HK$466) for long-haul services

The airline said that despite a recent drop in crude oil prices, jet fuel prices remain high. The price of jet fuel has been consistently higher than that of crude oil due to additional refinery costs, limited refinery capacity and persistent high demand.

The new fuel surcharges that kick in on 1 February are based on information collated two months earlier when the jet fuel price level was higher than now.

Cathay Pacific regrets the need to impose fuel surcharges on its passengers, but the airline is left with little option because it still needs to absorb around 40 per cent of the increase in fuel costs. Fuel is now the single largest cost factor for the airline, accounting for some 30 per cent of its total operating costs.

In terms of surcharges, Cathay Pacific is still lagging behind other international airlines, many of which do not have to seek Government approval to impose their surcharges. Many international airlines are levying surcharges of more than US$15 for short-haul services and in excess of US$70 for long-haul services.

Cathay Pacific's policy is to balance the interests of its customers with the need to run a cost-efficient airline in the interests of staff and shareholders. The airline has adopted a number of efficiency measures to tackle the fuel cost issue, including the introduction of "silver bullet" freighters, stripped of paint to reduce weight and fuel burn, and new routes that save fuel by cutting flight times. Such fuel-saving initiatives will be further enhanced to alleviate the impact of high fuel prices.