Malaysian carriers take off surcharge

PETALING JAYA - Flying around the region will be a much cheaper affair with three Malaysian carriers, the AirAsia group, Firefly and Malindo Air abolishing their fuel surcharges in line with declining global oil prices.

Malindo and AirAsia group and its long haul affiliates AirAsia X, Thai AirAsia X and Indonesia AirAsia X removed their fuel surcharge effective yesterday.

Firefly was first to remove the fuel surcharge for all its flights effective Jan 16.

The heat is now on Malaysia Airlines (MAS), but it is not clear if it will follow suit even though its peers like Japan Airlines and Cathay Pacific have done so.

Recently, Virgin Australia and Cebu Pacific also abolished their fuel surcharge. MAS did not reply to queries from The Star.

The removal should lead to lower cost of air travel for travellers, who no longer have to help airlines foot their fuel bill, something which they have been doing since 2011.

Fuel surcharge is a levy imposed in addition to the airfare to help airlines pay for their fuel cost when oil prices were rising. There were times when the fuel surcharge was higher than the actual fare.

Fuel is a key operating cost for airlines making up 30 per cent to 50 per cent of operating expense.

The removal comes as crude oil prices fell by more than 50 per cent to less than US$50 (S$67) a barrel. Yesterday, crude oil prices hovered around US$45 a barrel.

"Airlines were quick to impose the fuel surcharge when oil prices rose, but slow to remove them when it came down. But it is encouraging that they have finally done it,'' said a traveller.

Another added: "We are hoping for better ticket pricing with the falling oil prices.

"With oil prices at half of what airlines used to pay, they should pass the cost savings to us."

Some experts are already talking about an all-out airfare war.

"We are a high-value, low-fare airline and we will continue to strive to make flying as affordable as possible," AirAsia Group Chief Executive Officer, Tan Sri Tony Fernandes, said yesterday.

"This decision was made in November in line with declining global oil prices.

"We are only able to implement it now but we believe removing fuel surcharge and reducing travel costs will be a huge boost to the tourism industry.

"This will be a plus point for consumers, but the economy will also benefit from this as the tourism industry is a great job creator."

AirAsia said the removal of the fuel surcharge will further reduce travel costs and stimulate more demand for travel and tourism. With the fuel surcharge removed, AirAsia travellers will be able to find domestic flights from as low as RM19 (S$7) one way all-in, and international flights from RM49 one way all-in.

AirAsia and its group had previously imposed RM20-RM150 in fuel surcharge, Firefly RM35-RM45, and for Malindo it was RM20 for domestic routes.

Malindo had abolished the fuel surcharge for international travel seven months ago, said its chief executive Chandran Rama Muthy.

"The latest removal is in line with the revised Budget 2015 to help promote domestic tourism,'' Chandran said.