June 30, 2005
KUALA LUMPUR (AFP) - Malaysian budget carrier AirAsia said Thursday it will suspend plans to impose fuel surcharges until government moves to rationalise domestic air routes are resolved, a report said.
Despite rising fuel prices, AirAsia chief executive Tony Fernandes said the carrier would wait for the rationalisation exercise to be implemented before imposing a surcharge.
The surcharge, which was approved by the government in May, will be imposed on AirAsia's domestic and regional routes.
"We hope the rationalisation will come soon. Fuel prices have continued to rise," Fernandes was quoted as saying by the official Bernama news agency.
He added that a reworking of the domestic route system was important given that AirAsia had to bear the cost of spiralling fuel prices, in contrast to flagship carrier Malaysian Airlines whose domestic operations are government-subsidised.
Transport Minister Chan Kong Choy said earlier this month that AirAsia and Malaysia Airlines will cooperate on certain domestic routes as part of an industry rationalisation.
Newspaper reports have said that the proposal involves AirAsia taking on some of Malaysia Airlines' less profitable routes but few details have emerged on the plan so far.
Malaysia Airlines last month said net profit fell 29 percent to 326.1 million ringgit (86 million dollars) in the year to March due to higher fuel costs, which more than offset record international traffic growth.
The carrier currently flies to 88 international and 32 domestic destinations.
AirAsia, which launched as a budget operator in December 2001 with just two aircraft, has become a significant player in the industry and been imitated by startled national carriers along with a host of new low-cost entrants.
AirAsia is now Southeast Asia's biggest low-cost carrier in terms of fleet size and derives much of its business within Malaysia. It also operates in Thailand, Indonesia, the Philippines and China.