(Yicai) April 8 -- Shares of Chinese mainland-listed airlines climbed after international oil prices dropped sharply following the announcement of a temporary ceasefire in the Middle East.

China Eastern Airlines [SHA: 600115] and China Express Airlines [SHE: 002928] today surged by the 10 percent exchange-imposed daily trading limit to CNY4.66 (68 US cents) and CNY8.58, respectively. Air China [SHA: 601111], China Southern Airlines [SHA: 600029], and Juneyao Airlines [SHA: 603885], among other carriers, surged more than 6.5 percent.

The Brent and West Texas Intermediate crude oil prices plunged between 13 percent and 16 percent today after the United States and Iran accepted a temporary ceasefire proposal put forward by Pakistan. The Strait of Hormuz, through which about 20 percent of global oil flows, will open for safe navigation for two weeks from April 10.

Fuel costs are airlines’ largest expense, accounting for more than 30 percent of their operating costs. In 2024, the fuel costs of Air China, China Eastern, and China Southern made up around 35 percent of their total costs.

Air China said in its 2024 financial report that, with other variables remaining constant, a 5 percent fuel price fluctuation could impact the company’s costs by CNY2.7 billion (USD390.5 million).

After the outbreak of the Middle East war, airlines were under great pressure from the sharp rise in oil prices and raised fuel surcharges on both international and domestic routes.

The suspension of the war may also relieve the tight operation of air routes to and from the Middle East and Europe.

The number of flights between China and the United Arab Emirates, Qatar, and Saudi Arabia had resumed only to about 20 percent of the normal level as of March 31, according to statistics from Flight Master. The flights were mainly operated by Middle Eastern airlines, as none of them were run by Chinese airlines.

The Middle Eastern transport hubs have been weakened, and Asia-Europe air routes are being reshaped, said Han Tao, a civil aviation industry insider, adding that Chinese carriers and airports will embrace new development opportunities.

Editor: Futura Costaglione