Record-high prices for oil force carriers to look for other means of compensating for increased overhead Airlines may lift fuel surcharges on cargo by 33 per cent to cover rising operating costs, after applying to the government to raise the levy. The Hong Kong Board of Airline Representatives (BAR), which represents more than 70 airlines serving the market, on Friday asked the authorities for permission to add two levels to the surcharge index, after reaching the existing ceiling on May 5. If approved by the Civil Aviation Department (CAD), Asia exporters by July could be paying a fuel surcharge of $2.40 per kilogram to ship their goods to the United States and Europe, a rise of 33 per cent. Fuel surcharges for cargo are indexed against fuel prices. The present index ceiling of 190, or $1.60 per kilogram, has been breached for more than the allowed two weeks, which means any raises are automatic. With no way to raise the index past 190, the profit margins of airlines serving the south China export market through Hong Kong have come under pressure as fuel prices climb. 'Our members are very concerned about this, which is why we submitted the application as soon as we learned the ceiling had been breached for two weeks,' said Tom Wong, the chairman of BAR's cargo sub-committee. The prices for jet fuel have risen more than 30 per cent since the end of last year. BAR proposed the index ceiling be set at 240, or $2.40 per kilogram, achievable in two steps. The interim index step would be 215, or $2 per kilogram. Two weeks' notice must be given between CAD approval and implementation. Approval would place the burden on exporters to absorb the cost of rising fuel prices. One air transport manager for a European electronics manufacturer, which exports about 2,000 tonnes of goods a year from south China, said the charges could not be passed on to the consumer. 'We can't raise our product prices. We negotiated those at the beginning of the year based on what we thought our fixed costs would be,' he said. 'The only way we compensate is to move more by sea.' Freight rates to Europe and the US are in the $20 to $23 per kilogram range. Sunny Ho Lap-kee, executive director of the Hong Kong Shippers Council, said a $2.40 surcharge was unprecedented. 'A surcharge which reaches 10 to 15 per cent of the freight rate is very high,' Mr Ho said. 'We would certainly question such a big jump. 'The shippers shouldn't be asked to absorb it all. It is something that should [be] spread out between all the stakeholders in the supply chain.' Airlines said that surcharges requested last week for passenger tickets did not fully recover the higher fuel costs and claimed the cargo levy would be partly compensatory as well. More than 1.3 million tonnes of goods were exported by air through Hong Kong last year.