UDPATE 1-China airlines to link surcharges to fuel costs-NDRC

* Fuel surcharges to be set according to fixed formula

* Surcharges must be adjusted within five days of cost change
(Adds details)

BEIJING, Nov 12 (Reuters) - Chinese airlines will in future
set their fuel surcharges based on their fuel costs, China's top
planning body, the National Development and Reform Commission,
said on Thursday.

The NDRC, which previously had set a unified standard for the
surcharge, said henceforth airlines would use a formula in which
the only variable was their own fuel costs. The formula also uses
an index that will be updated regularly, with the next update in
April 2010.

The NDRC gave a formula for calculating surcharges, which was
different for short-haul flights and flights of more than 800 km
(500 miles).

For flights of less than 800 km, the formula is:

0.00002908 x (cost of jet fuel - 4,140 yuan/tonne) x 800

For flights of more than 800 km, the formula is:

0.00002908 x (cost of jet fuel - 4,140 yuan/tonne) x 1,500

The NDRC used to stipulate that when the cost of jet fuel was
below 4,140 yuan ($606.50) per tonne, airlines should suspend
collection of the surcharge.

"This practice will be continued and airlines should shoulder
at least 20 percent of the increased costs," the NDRC said in a
statement published on its website (www.ndrc.gov.cn).

The jet fuel cost was calculated as the weighted average of
domestically purchased jet fuel and imported fuel, the planner
said.

Airlines must suspend or reduce the surcharge within five
days of a jet fuel cost drop, the NDRC said, adding that this was
to prevent airlines from delaying surcharge cuts and to protect
passenger interests.

Jet fuel accounted for about 40 percent of the total
operating costs of Chinese airlines, and about 70 percent of
their flights were below 800 km, NDRC said.
(Reporting by Eadie Chen and Tom Miles; Editing by Jacqueline
Wong and Chris Lewis)