AirAsia X hikes ticket prices by 40%, cut capacity by 10% as Iran war hits fuel costs

Southeast Asia’s largest low-cost carrier AirAsia X said on Monday it was raising ticket prices by as much as 40 per cent and cutting routes to cushion the impact of the war on Iran, but stressed demand for flights remained high.

The Malaysia-based no-frills airline said about 10 per cent of its overall flights had been cut so far. It has raised fuel surcharges by about 20 per cent, while fare prices have increased between 31 per cent and 40 per cent.

Average jet fuel costs have soared to about US$200 per barrel from around US$90 previously, Group Chief Executive Officer Bo Lingam said in a media briefing on Monday, describing it as the airline’s most critical challenge.

The 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.

It also faces the threat of jet fuel supply shortages across the region, from Vietnam to the Philippines, including its home market of Malaysia.

Tony Fernandes, the CEO of AirAsia’s parent company, Capital A, poses with a model of his company’s plane. Photo: Reuters

Founder Tony Fernandes said at the same briefing higher prices were “unavoidable” and that capacity would be cut on routes “where we don’t believe we can cover the cost of the fuel”.