AirAsia X raises fares amid soaring jet fuel prices, plans fleet expansion

AirAsia X Bhd, the Malaysian low-cost carrier that now houses the entire AirAsia aviation group, has announced a significant fare increase of between 30% and 40%. The rise is attributed to soaring jet fuel prices, which have climbed from US$90 per barrel before the Middle East conflict to US$200 today. The airline's CEO, Bo Lingam, explained that the lack of a fuel hedge and increased fuel surcharges contribute to the higher fares, although demand for flights remains robust.

In response to the elevated fuel costs, AirAsia X has reduced its flight capacity by about 10%, primarily by ending festive season routes that are unprofitable and other cost-cutting measures. Despite these adjustments, the company maintains that no layoffs have occurred and workforce levels remain stable. Industry veteran Tan Sri Tony Fernandes expressed confidence that the airline will navigate the current crisis, citing past experiences with geopolitical and economic disruptions.

Fleet and Market Outlook

The company plans to proceed with its fleet expansion as scheduled, with four new aircraft deliveries expected this year. The parent company, Capital A Bhd, which owns a 19% stake in AAX, completed its exit from the Practice Note 17 (PN17) status through a strategic asset transfer, consolidating its aviation assets. As of Monday, AAX's shares closed slightly higher at RM1.17, valuing the group at approximately RM3.93 billion.

Overall, industry players are optimistic about weathering the current high fuel price environment, leveraging past experience and strategic planning to sustain operations and growth amidst geopolitical uncertainties and fluctuating oil markets.