MAS to raise fuel surcharge

KUALA LUMPUR, June 12 — National carrier Malaysia Airlines (MAS), engaged in a fare war with budget airline Air Asia, is looking to raise its fuel surcharge in two weeks on a route-by-route basis, chief executive Datuk Idris Jala said today.

"Over the past year, we have increased our fuel surcharge five times in the light of the ever increasing fuel prices," he told Bernama after the launch of MAS's Second Quality Assurance Conference and Business Assurance and Control Assessment (BACA) initiative.

Idris said the entire airline industry was going through a crisis as result of rising fuel prices. "If the oil prices stay at the current levels, a lot of airline companies could go bankrupt."

MAS currrently charges between US$12 (RM39.24) to US$109 (RM356.43) in fuel surcharges for domestic and international destinations.

International jet fuel prices have been rising in tandem with global crude oil rates, touching US$168.1/barrel up 92.7 percent from a year ago, reported energy information provider Platts. Crude oil touched US$139/barrel this week.

Malaysia cut subsidies and raised pump prices for petrol and diesel last week as soaring global crude oil prices were eating into the government's development budget allocations. However, Prime Minister Datuk Seri Abdullah Ahmad Badawi has ruled out further price jumps.

While crude oil prices started rocketing this year, MAS slashed fares in its Everyday Low Fares programme in April, extending it to Asean destinations last month, prompting Air Asia to launch its own Sub-Zero fares programme for domestic and international routes. Both airlines were trying to fill seats as people took other options or cut their travel plans.

Ironically, Air Asia on May 12 responded to MAS's new fares by cutting RM5 from its fuel surcharge of RM16 within Peninsular Malaysia and RM43 for flights that cross the South China Sea to Sabah and Sarawak.

Both airlines recently reported figures for their first quarter of 2008 with MAS slipping in profits while Air Asia's were higher.

MAS reported a net profit of RM120.06 million for the first quarter ended March 31, down 9.5 percent from RM132.71 million a year ago with operating profit slipping to RM132.9 million from RM146.8 million a year ago on higher operating expenses mainly from the increase in fuel cost. Revenue was higher at RM3.75 billion against RM3.54 billion a year ago.

Air Asia, however, posted substantial gains with a net profit of RM161.27 million for the first quarter ended March 31, up 85.6 percent from RM86.87 million a year earlier, boosted by an improvement in its operations, foreign exchange gains and deferred taxation.

Its revenue climbed 31 percent to RM535.15 million from RM406.22 million previously. Gross profit from operations soared 39.2 percent to RM129.31 million from RM92.88 million while pre-tax profit jumped 155 percent to RM110.1 million from RM43.07 million.

From The Malaysian Insider