Local travel agencies are feeling the pinch of the recent official imposition of fuel surcharges on international flights, yesterday's Shanghai Morning Post reported.

Depending on distance, costs may surge by 100 yuan (US$12.3) to over 600 yuan, the report said, citing industry sources.

China's aviation authority (the General Administration of Civil Aviation) announced on Monday that permission  had been granted to domestic airlines to double fuel surcharges as airlines struggle due to high oil prices.

As a result, fuel surcharges rose to US$25 per passenger from US$12 on flights between China and Asian nations and the fee doubled to US$40 on flights between China and Europe, North America, Australia and the Middle East, CAAC said.

This is the second time this year that Chinese airlines have raised fuel surcharges on international routes. The first, smaller increase was in May.

Travel agencies may be obliged to shoulder the additional airfare costs, since it is already off-peak season in the out-bound market and, therefore, not a good time to raise prices and shift the rising cost onto travelers, according to Wang Fang, out-bound center manager of Shanghai Jinjiang International Travel Co Ltd, a leading travel agency in the city.

Costs on routes to Australia and Europe, for example, will surge between 320 yuan and 640 yuan, she noted.

Despite that, some analysts argue that prices for routes to destinations such as Southeast Asia will be increased by some 200 yuan, because the business is already low-margin.

To divert people's attention from prices, more agencies will try to separate fuel surcharges, airport construction charges, visa fees and other costs from their quoted prices so as to make their prices low and competitive.

For instance, an eight-day tour to Singapore and Bali marketed by some local agencies is priced at an attractive 2,980 yuan. With fuel surcharges and other additional fees included, the full expense should be around 4,300 yuan.

(Shanghai Daily October 27, 2005)