AirAsia scraps fuel surcharge

Malaysian budget carrier AirAsia on Tuesday scrapped fuel surcharges on all its flights including on long-haul carrier AirAsia X, to drum up business amid the global downturn.

AirAsia chief executive officer Tony Fernandes said the regional carrier's fares will remain unchanged, as falling oil prices enable it to make air travel more affordable.

"We want to get rid of all surcharges and we have been able to... be the first airline in the world that is completely getting rid of fuel surcharges," he told reporters.

"This initiative recognises the current economic situation and the need to provide more affordable and transparent air fares for business and leisure travellers," he added.

Southeast Asia's largest budget carrier implemented the fuel surcharge in July 2005, in line with other airlines as the price of oil soared, reaching 147 dollars per barrel in July this year, and easing to around 60 dollars now.

AirAsia passengers pay an average fuel surcharge of 47 ringgit (13 dollars) on each sector.

The carrier said passengers will still have to pay other taxes -- a 22.50 ringgit administration and insurance charge and airport tax of 6.00 ringgit for domestic flights and 25.00 ringgit on international routes.

It is also offering 500,000 free seats, with no fare or fuel surcharge, in a five-day campaign beginning midnight (1600 GMT) Tuesday for flights in the third quarter of 2009.

Fernandes said however that the fuel surcharge could return if oil prices surged again.

He said that although many airlines are cutting capacity as a global recession looms, AirAsia was planning on increasing routes and capacity because of its low prices, high load factors and aggressive marketing.

"What we are doing is to produce more routes and lower prices to fight out of the economic recession," he said.

Fernandes said that while scrapping the fuel surcharge was unlikely to affect the airline's profitability, the carrier will initiate other programmes to make up for the loss of revenue.

AirAsia stands to lose at least 940 million ringgit in fuel surcharge revenues in 2009, as Fernandes predicts more than 20 million passengers will fly the airline next year.

AirAsia X was launched in January 2007 and is an affiliate of AirAsia and Virgin Group. It flies to the Gold Coast, Melbourne and Perth in Australia, as well as Hangzhou in China. It plans to fly to Britain early next year.

Sumber: MSN News