A new fuel pricing mechanism for Chinese airlines that became effective yesterday is aimed at further cutting passengers' travel costs, two government bodies said yesterday.

Airlines must cut fuel surcharges within the first five days of a month when ex-factory oil prices drop, the National Development and Reform Commission and the Civil Aviation Administration of China said in a joint statement yesterday.

But airlines can increase fuel surcharges only since the sixth day of a month when fuel cost rises, to allow passengers to benefit from the lower fuel price in the first five days of the month.

The move aims to stop airlines from charging higher prices during domestic holidays such as Labor Day and National Day, which both fall within the first six days of the months.

The NDRC, the country's top economic planning body, began adjusting ex-factory prices for jet fuel monthly from August 1 to better reflect fluctuations in oil prices on the global markets.

Airlines can adjust fuel surcharges when ex-factory prices fluctuate more than 250 yuan (US$39) a ton.

In the latest jet fuel cost adjustment, the ex-factory fuel price was cut to 7,277 yuan a ton from 7,501 yuan.

Domestic airlines now charge a 140 yuan surcharge on routes longer than 800 kilometers and 80 yuan on shorter routes.