AirAsia X Fares Rise as Much as 40% Due to Iran War, CEO Says

Article content(Bloomberg) — Malaysian low-cost carrier AirAsia X Bhd. has hiked airfares by as much as 40% and raised fuel surcharges by a fifth after jet fuel costs more than doubled in the wake of the Iran war.Sign In or Create an AccountEmail AddressContinueor View more offersArticle contentAverage jet fuel costs have soared to about $200 per barrel from around $90 previously, Group Chief Executive Officer Bo Lingam said in a media briefing on Monday, describing it as the airline’s most critical challenge.Article contentWe apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.Article contentThe spike in fuel costs is hitting low-cost airlines particularly hard, pressuring business models built on cheap fares, while exposing AirAsia X’s fragile finances. Southeast Asia’s biggest budget airline group also faces the threat of jet fuel supply shortages across the region, from Vietnam to the Philippines, including its home market of Malaysia.Article contentArticle content“We’ve been through many crises,” co-founder and strategic adviser Tony Fernandes said in the same briefing at the company’s headquarters in Selangor state. While the group doesn’t “have all the answers” to the geopolitical situation, management is drawing on past experience and is prepared to respond, including cutting capacity or reducing costs if needed, he added.Article contentTop StoriesGet the latest headlines, breaking news and columns.There was an error, please provide a valid email address.Sign UpBy signing up you consent to receive the above newsletter from Postmedia Network Inc.Thanks for signing up!A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Article contentThe carrier has already cut about 10% of the group’s flights after the Eid al-Fitr holidays and is scaling back unprofitable routes, with some reductions expected to be temporary and others permanent, Lingam said. It is adjusting aircraft deployment and bringing forward maintenance checks to manage costs.Article contentAirAsia X — which doesn’t hedge its fuel costs — is also awaiting more details from the government on fuel availability in the coming months.

Prime Minister Anwar Ibrahim on Sunday signaled Malaysia may face fuel supply uncertainty as early as June, highlighting the country’s vulnerability to the global energy crunch even as near-term supplies remain intact.Article contentThe turmoil has complicated its ambitious expansion into the Middle East, though AirAsia X said it still intends to move ahead. The airline had planned to launch a Bahrain hub and start the Kuala Lumpur-Bahrain-London route on June 26 and remains committed if conditions improve in time, according to Lingam.Article contentBookings from Europe and other regions into Asia are rising and the group is looking to increase frequencies to Central Asia, including Istanbul, Group Chief Commercial Officer Amanda Woo said. It is also exploring partnerships with other carriers as travel demand shifts.Article contentAirAsia X shares rose as much as 4.3% on Monday, trimming the losses since the war began to around 41%. Still, the company remains the worst performer in the Bloomberg World Airlines Large, Mid & Small Cap Price Return Index.Article content—With assistance from Danny Lee.Article contentTrending U.S. within 'weeks' of oil shortages if war in Iran continues: Eric Nuttall Oil & Gas CRA denied taxpayer with multiple health issues the disability tax credit Personal Finance Why rate watchers shouldn't take the Bank of Canada at its word Mortgages Canada's $150-billion challenge: How to build a homegrown defence sector and fast Economy The worst is yet to come for fuel prices: FP Video News Share this article in your social networkCommentsYou must be logged in to join the discussion or read more comments.Create an AccountSign in Join the Conversation Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information. U.S. within 'weeks' of oil shortages if war in Iran continues: Eric Nuttall Oil & Gas CRA denied taxpayer with multiple health issues the disability tax credit Personal Finance Why rate watchers shouldn't take the Bank of Canada at its word Mortgages Canada's $150-billion challenge: How to build a homegrown defence sector and fast Economy The worst is yet to come for fuel prices: FP Video News