S.Korea mulls air fuel surcharge hike, airlines up

SEOUL (Reuters) - South Korea may raise fuel surcharges for international flights after requests by airlines to reflect soaring oil prices, a transportation ministry official said on Wednesday, lifting shares of Korean Air and Asiana.

"We are considering the request and the decision is likely to be announced by mid-June as a part of overall counter-measures against rising energy prices," an official at the ministry told Reuters.

The ministry official said Korean Air (003490.KS) and Asiana (020560.KS) and had requested earlier in May that the government raise the maximum fuel surcharge they can impose on long-distance flights as oil prices continue their rush to fresh record highs.

Oil prices CLc1, which have quadrupled in the past five years and hit a record of just over $135 last week, were trading at around $128 on Wednesday.

They have been rising inversely to the dollar amid a fever of speculative trading as China and India race for economic growth.

Currently Korean airlines charge $140 in fuel surcharges for one-way long-distance international flight, up from $52 late last year.

South Korea, which depends heavily on energy imports to power Asia's fourth-largest economy, is also considering raising electricity costs in the second half.

If it does, that would mark the first increase since it raised prices by 2.1 percent in January 2007, and will follow hikes by a series of Asian nations to fuel and power prices as they can no longer afford to shield consumers from soaring world oil prices. ID:nSP279116

So far South Korea's efforts have been centered on softening the blow of oil prices for consumers to ease inflationary pressure in the face of soaring food and energy prices.

South Korea slashed import tariffs on oil products such as gasoline and fuel oil to 1 percent from 3 percent in April but kept tariffs on crude oil and liquefied natural gas at 1 percent, turning away from its initial pledge to cut the duties, because of concerns over tax revenue losses.

Shares in Korean Air jumped 5.6 percent by 0327 GMT, while Asiana was up 2.7 percent, beating a 0.4 percent fall in the broader market .

(Reporting by Miyoung Kim; Editing by Keiron Henderson)