Chinese airlines suffered losses totaling more than three billion yuan in the first six months of this year, the Beijing News reported on Friday.

Quoting the General Administration of Civil Aviation, the newspaper said the losses were mainly caused by soaring fuel prices, which hit 5,040 yuan per ton after the National Development and Reform Commission raised the price by 300 yuan on March 26.

Fuel accounts for nearly 40 percent of Chinese airlines operational costs.

Aviation fuel consumption totaled 9.3 million tons in 2005, costing airlines 45.1 billion yuan, 14.8 billion yuan more than the previous year.

Meanwhile, the report said Chinese airlines carried 74.25 million passengers in the first half, up 17.9 percent from the same period a year ago.

Cargo traffic increased 11.4 percent to 1.56 million tons, while flight volume stood at 138 million ton kilometers, a rise of 16 percent over the first half of 2005.

Industry insiders warned that Chinese airline capacity would grow rapidly in the next five years as domestic carriers had ordered more than 300 aircraft from abroad since last year, indicating oversupply and cut-throat competition.

Source: Xinhua