On September 25, Cathay Pacific Airways has been notified by the Civil Aviation Department (CAD) of Hong Kong that it is one of the airlines granted approval to reduce its passenger fuel surcharge.

In the case of Cathay Pacific, approval has been granted for a reduction in fuel surcharges, for a two-month period effective October 1, 2008, to US$25.1 (HK$196) for short-haul services in South and North East Asia and US$106.7 (HK$832) for long-haul services.

The current surcharges are US$29.60 (HK$231) for short-haul services and US$118.50 (HK$924) for long-haul services.

Despite recent decreases in crude oil prices, jet fuel prices remain high and continue to pose an enormous challenge to the aviation industry. For example, the average jet fuel price paid by Cathay Pacific in the first eight months of 2008 at US$142 per barrel was 67% above that paid in the eight months of 2007. Spot prices of US$125 on September 24 were nearly 40% higher than the average of US$91 in 2007.

Jet fuel costs account for about half of the Cathay Pacific's net operating costs, and changes in surcharges cover only less than half of the increased fuel cost.

A Cathay Pacific spokesman said: "We understand the CAD's desire to strike a reasonable balance between the interests of the travelling public and those of airlines, but we would like to see further improvements to the passenger fuel surcharges mechanism to more accurately reflect airlines' fuel costs, particularly on ultra long haul routes to destinations such as Europe and North America. The simple fact is that we burn more fuel to enable us to carry the extra fuel required for these non-stop long haul services."

Cathay Pacific regrets the need to impose fuel surcharge on passengers, but the airline's fuel surcharges continue to lag far behind the surcharges imposed by other international airlines on comparable routes outside Hong Kong. As the CAD has pointed out, fuel surcharges on Hong Kong routes are much lower than the average at international level - by some 44% on short-haul routes and 58% on long-haul services.

Most major airlines currently levy fuel surcharges of some US$30 to as much as almost US$100 per short-haul sector and surcharges of US$160 to more than US$200 on long or ultra haul flights are not uncommon, some even at more than US$300.

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 its staff and shareholders. The airline will continue to pursue a series of cost-efficiency measures to tackle increased costs and counter the impact of high fuel prices.