Airline shares went into a nosedive in Shanghai on Tuesday following the announcement Monday about higher jet fuel prices, but analysts said the market performance was not related to the price increase.
Shares in China Eastern on Tuesday plunged 3.13 percent to 5.26 yuan ($0.81), Air China slid 2.74 percent to 9.58 yuan, and China Southern dropped by 3.02 percent to 8.04 yuan.
“The decline of the aviation industry shares is mainly due to weak economic figures released in the US,” said Li Lei, an industry analyst from CITIC China Securities.
According to Reuters, US stock index futures pointed to a lower opening on Tuesday, with futures for the S&P 500 SPc1 down 0.5 percent, Dow Jones DJc1 futures down 0.2 percent and NASDAQ 100 NDc1 futures down 0.5 percent.
“The amount of rise itself is not significant compared to the total jet fuel price, and its impact has been absorbed by the carriers,” Luo Yanyan, an aviation industry analyst from China Merchants Securities, said on Tuesday, adding that the performance of airline stocks is mainly influenced by the transport volume.
On Monday, the NDRC set the factory price of domestic jet fuel at 7,725 yuan per metric ton from August 1, leading to an increase in the fuel prices by China National Aviation Fuel for domestic airliners for their domestic flights from 7,700 yuan to 7,785 yuan per ton, an increase of 1 percent.
However, the increase in the jet fuel price has pushed the fuel surcharge by the carriers to a record high.
From on Tuesday, several carriers, including Air China, Spring Airlines and China Southern, announced to increase the additional charge on the domestic routes longer than 800 kilometers from 140 yuan to 150 yuan per passenger.
Carriers suffer the most from the jet fuel price increases, as the increase in surcharges only covers a small part of the total increase in the cost, said Lin Zhijie, a researcher at Kent Ridge Consulting.