China Southern Airlines Co., the country's biggest carrier, said its first-quarter loss narrowed 69 percent because of lower fuel costs and higher surcharges.

The carrier posted a loss of 188 million yuan ($24 million), or 0.04 yuan a share, in the three months ended March 31, compared with 603 million yuan, or 0.14 yuan, a year earlier, the Guangzhou-based company said in a statement to the Shanghai Stock Exchange Tuesday. Sales rose 26 percent to 11.9 billion yuan.

China Southern flew 17 percent more passengers in the first quarter, as the country's 11.1 percent economic growth rate boosted travel demand. The Chinese government has also cut jet fuel prices three times this year, while keeping ticket surcharges at a level twice as high as a year earlier.

The airline flew 12.6 million passengers, filling 71.4 percent of its seats, in the three months ended March. Cargo volume rose 4.9 percent to 190,000 tons.

China Southern is adding capacity to grab market share, particularly in its home base of Guangdong, China's manufacturing hub and richest province. It plans to add 68 planes this year, expanding its fleet about a fifth from 309 aircraft at the end of last year. It is set to start at least 10 new overseas routes before the Beijing Olympics Games next year, challenging Air China Ltd., the nation's largest international carrier.

The airline posted its first annual profit in four years in 2006, helped by a stronger yuan and increased traffic. Net income was 188 million yuan, compared with a 2006 loss of 1.85 billion yuan.

China Travel

Overall passenger numbers in China rose 16 percent to 40.9 million in the first quarter, according to the General Administration of Civil Aviation.

Shares of China Southern fell 3.3 percent to HK$3.50 in Hong Kong Monday. The stock has gained 11 percent this year, compared with an 19 percent gain in the 16-member Bloomberg Asia Pacific Airlines Index. The airline's Shanghai-listed stock was suspended on March 23 ahead of a share reform plan.

China cut the levy on domestic flights of more than 800 kilometers (497 miles) to 80 yuan ($10) each way from Jan. 21. The levy on shorter flights fell to 50 yuan. That compares with 40 yuan and 20 yuan respectively a year earlier. Levies were as much as doubled from Sept. 21 last year before the Jan. 21 cut.

The price of jet fuel averaged $72.11 a barrel in the first quarter in Singapore, 4.7 percent lower than a year earlier, according to data compiled by Bloomberg.