Arabian Post Staff -Dubai
The Malaysia-based low-cost carrier said average jet fuel prices had climbed to about $200 a barrel from around $90 before the conflict, with some supplies in the region quoted even higher amid shortages. Lingam described the fuel spike as the company’s most critical challenge, while adding that fares would be reviewed periodically as market conditions evolve. The airline is also operating without a fuel hedge, leaving it directly exposed to swings in energy prices.
That exposure is significant because AirAsia X has become a far larger vehicle than its original long-haul model. In January, it completed the acquisition of AirAsia Berhad and AirAsia Aviation Group Limited from Capital A, consolidating the wider aviation business under AirAsia X and effectively bringing seven airlines under one banner. The enlarged structure means the effect of rising fuel costs now reaches across a broader network, making pricing decisions and route economics more sensitive to abrupt shocks in oil and refining markets.
Executives have indicated that higher fares alone may not be enough to absorb the pressure. Reuters reported on April 6 that the carrier may trim capacity in markets where fuel costs cannot be fully recovered, while Tony Fernandes said parts of the network would have to be assessed route by route. Separate reports indicated the group could reduce around 10% of flights after Eid al-Fitr, especially where yields do not justify sharply higher operating costs.
The timing is awkward for a company trying to press ahead with expansion. AirAsia X has said it remains committed to opening a Bahrain hub in June and launching its Kuala Lumpur-Bahrain-London route, a move designed to restore service to London after more than a decade and establish the airline’s first hub outside Asia. Yet Lingam has also made clear that if the regional conflict drags on, the economics and even the routing of future European growth may need to be revisited, with alternatives such as operating through Turkey under consideration.
For passengers, the immediate result is a more expensive budget-travel market at a time when demand had remained robust across much of Southeast Asia. AirAsia X and its parent group have argued that leisure and visiting-friends-and-relatives traffic is still resilient, particularly on intra-Asian routes. Even so, the latest fare increases illustrate the limit of the low-cost model when fuel, a core expense typically denominated in dollars, rises this sharply and this fast. Airlines can stimulate demand with low base fares in normal conditions, but they have far less room to absorb sustained increases in jet fuel without passing costs on to travellers.
The pressure is not limited to one carrier. Malaysia Aviation Group, parent of Malaysia Airlines, warned last week that the Middle East conflict could cloud its outlook despite stronger 2025 earnings. Its management said every $1 increase in oil prices adds about 50 million ringgit in cost, although the group has hedged part of its fuel needs and secured supply through 2026. That contrast matters: carriers with hedges and stronger balance-sheet buffers may be able to delay fare adjustments, while airlines with less protection are forced to react faster and more visibly.
Across Asia, the fuel shock is already showing up in domestic pricing benchmarks. Aviation turbine fuel prices in India crossed record levels in April, with reports showing domestic and international fuel costs rising by more than 100% in a month. That move has added to concerns that airfare inflation will broaden beyond the Middle East and Southeast Asia, especially if supply bottlenecks persist or if shipping routes and refinery output remain under strain.
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