AirAsia scraps fuel surcharges as oil price plummets

AP News
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Posted: Jan 26, 2015 4:56 AM

KUALA LUMPUR, Malaysia (AP) — Southeast Asia's biggest budget carrier AirAsia on Monday scrapped fuel surcharges on tickets following the decline in global oil prices.

AirAsia said the move also applies to flights under its long-haul arm AirAsia X.

Oil prices are now below $50 per barrel after 6 months of declines, pushing down jet fuel prices.

Chief Executive Tony Fernandes said the move will help reduce travel costs, stimulate demand and boost tourism in the region. The surcharges range from as low as 20 ringgit ($5.50) for domestic flights to 150 ringgit ($41.50) on international flights for a one-way ticket, officials said.

Airlines impose the surcharges to pass on higher fuel costs to travelers when fuel prices are rising. However only a few airlines have abolished them despite oil prices dropping about 45 percent in the past three months.

AirAsia last month initially said it would not remove fuel surcharges due to a weaker Malaysian currency. But rivals Virgin Australia and Cebu Pacific in the Philippines abolished fuel surcharges earlier this month, prompting it to follow suit.

AirAsia has dominated cheap travel in Southeast Asia for years but faces rising competition from the proliferation of discounts airlines in Asia.