Photo/Shetuwang

June 5 (NBD) -- A number of Chinese airlines, including Air China Limited (601111.SH), China Eastern Airlines Corp Ltd (600115.SH), China Southern Airlines Company Limited (600029.SH), and Spring Airlines Co., Ltd. (601021.SH), announced Monday they will resume fuel surcharge, removed three years ago, on domestic routes starting Tuesday. 

Adult passengers will be charged 10 yuan (1.6 U.S. dollars) each on every flight, while infants, children as well as soldiers and police officers who suffered disabling injuries while on duty would be exempted from the fuel surcharge. 

NBD noticed that the resumption of fuel surcharge is related to the rising aviation fuel costs. Fiscal reports for the first quarter of this year issued by China's three top airlines show that fuel costs constitute a major part of their increasing costs. 

Analyst with TF Securities Co Ltd said imposing fuel surcharge will be helpful to offset the increment of aviation fuel costs of airlines. 

In its research report, Changjiang Securities maintained a "buy" rating on both Air China and Southern Airlines, holding that airlines' earning power will be enhanced with the fuel surcharge levy and airfare increase for popular routes as part of the pricing reform.

Hua Chuang Securities gave a "strongly recommend" rating on Eastern Airlines on the grounds that the aviation industry will be on an upward trend between 2018 and 2020 and the valuation benchmark is expected to see an upgrade.

Email: lansuying@nbd.com.cn