'Unavoidable': AirAsia hikes ticket prices up to 40%, cuts 10% of flight capacity amidst War on Iran fallout

AirAsia is raising ticket prices by as much as 40 per cent amidst the fallout from the Israel-U.S. War on Iran.

The Malaysian carrier has also cut 10 per cent of its flight capacity and increased fuel surcharges by 20 per cent amid rising oil prices.

On Apr. 6, AirAsia X's Chief Executive Officer, Bo Lingam, told reporters in a media briefing that the oil shocks are the airline's most critical challenge, reported South China Morning Post (SCMP).

He said average jet fuel prices per barrel have more than doubled to around US$200 (S$257) from US$90 (S$116).

'Unavoidable'

At the same media briefing, Tony Fernandes, AirAsia's founder, said the higher ticket fares were "unavoidable".

Fernandes added that on routes where "we don't believe we can cover the cost of fuel", capacity would be cut, reported SCMP.

The company did not specify which routes would be affected, but according to data retrieved from Aeroroutes by Nikkei Asia, flights from Kuala Lumpur to South Asia will be reduced till June.

Fernandes noted that demand for flights is still high and that the current predicament is different from Covid-19 when planes were grounded.

Lingam added that the company's planned flight service to Bahrain will continue as planned, but declined to commit to it being maintained in the event of a protracted conflict in the Middle East.

Lingam said the service to Bahrain would "definitely" go ahead if the war ends before June this year, but Bahrain lies close to Iran and has taken damage in strikes.

AirAsia added 20% surcharge in March

According to Nikkei Asia, AirAsia X's chief commercial officer, Amanda Woo, noted that the airline added a 20 per cent fuel surcharge in March.

This was almost immediately after the Feb. 28 airstrikes on Iran.

Woo said that the group cannot "avoid" fare hikes, however she said AirAsia remains "very mindful" of ticket prices.

"We are able to spread [the costs] in a very careful way to the routes that we can actually recover with the current high fuel surcharge."

Sufficient stockpile of fuel till June

AirAsia said Petronas, Malaysia's state energy group, has a sufficient stockpile of jet fuel to last until June.

Nikkei Asia reported that Petronas is also procuring and securing supplies for the months ahead.

AirAsia X's Deputy CEO Ahmad Al Farouk said the group has to "meticulously" observe route profitability and seize opportunities to optimise the network.

He said: "2026 for now still looks manageable, but of course, the short of it is the duration of the crisis."

Top photo from David Syphers/Unsplash