A, 35, who is preparing for a honeymoon in Europe, recently saw a notice from an airline that said, "The round-trip fuel surcharge for two people has increased by 700,000 won." That means ticket prices will rise by that much. A asked, "Gasoline, diesel and kerosene have a price cap that limits how much prices can rise, so why not apply a price cap to jet fuel?"
Jet fuel for civilian aircraft is made by adding additives to kerosene. The aim is to give it properties that prevent evaporation or freezing even at low temperature and low pressure.
Since the Middle East war, international prices of kerosene, the base for jet fuel, have also surged. As a result, jet fuel prices have jumped sharply, they said. Korea's airlines use Singapore jet fuel prices as a benchmark, and prices that were around $90 per Barrel before the Middle East war have recently shot up to around $190 per Barrel.
Recently, the government implemented a price cap and set the price of kerosene that refiners supply to gas stations at 1,530 won per liter or less. The government said this price is about 500 won lower than the international price. If so, as A asked, couldn't a price cap also be applied to jet fuel, which is based on kerosene?
On this, a government official said, "It is hard to apply a price cap because jet fuel is difficult to view as an essential good." The price cap operates by having the government subsidize refiners with public funds for a significant portion of the gap between international oil prices and the capped price. On Mar. 31, the government formed a supplementary budget and said it would inject 5 trillion won to cover refiners' losses and more.
Because public funds are injected this way, a price cap can be applied to regular gasoline, diesel and kerosene, which the vast majority of the public uses. However, because jet fuel is not something the vast majority of the public uses as an essential good, it is difficult to apply a price cap.
There is another reason not to implement a price cap on jet fuel. Jet fuel is refueled at airports, and if Korea applies a price cap, foreign aircraft would also be able to refuel at low prices. That would mean helping foreign airlines with taxes paid by our citizens.
Meanwhile, domestic airlines are raising fuel surcharges one after another. Asiana Airlines raised fuel surcharges on long-haul routes such as the United States and Europe from 78,600 won to 251,900 won starting Apr. 1. Fuel surcharges on Southeast Asia routes, including Ho Chi Minh City, Vietnam, and Bangkok, Thailand, also rose by 170,000 won for round trips. Korean Air Lines raised fuel surcharges by 400,000 won round trip on New York and Washington routes. Some expect that next month, fuel surcharges on U.S. routes at Korean Air Lines will rise by 1 million won round trip.