CHINESE airlines narrowed their losses in the first quarter, aided by a stronger yuan and higher fuel surcharges amid booming travel demand.

The country's carriers posted a combined loss of 820 million yuan (US$110 million) in the first three months of this year, the General Administration of Civil Aviation of China said on its Website. The figure was 1.28 billion yuan less than a year ago, the CAAC said.

The carriers, including China Southern Airlines and Air China Ltd, increased revenue 20 percent to 40.5 billion yuan during the period. Their costs grew at a slower pace - 17 percent - to 41.3 billion yuan, the CAAC said.

"The large drop in losses was created by a booming economy that fueled air travel demand," said Ji Lijun, an analyst with Shanghai Securities. A stronger yuan helped reduce the airlines' US dollar-denominated debt, and higher jet fuel surcharges boosted financial performance, she added.

Chinese airlines flew 40.9 million passengers in the first quarter, up 16 percent from last year, as the country's 11.1 percent economic growth drove higher demand for business and leisure flights.

The carriers filled 72.7 percent of available seats in the quarter, up 1.2 percentage points from last year. The airlines also carried 858,000 tons of cargo in the period, a year-on-year rise of 13.3 percent, the CAAC said.

Air travel is forecast to rise 7.2 percent annually until 2025, according to Airbus SAS. China's airlines were operating a total 1,028 planes at the end of March, 66 more than at the end of 2006, the CAAC said.