KUALA LUMPUR, MALAYSIA – Long-haul low-cost carrier AirAsia X raised ticket prices and cut flights in response to higher fuel costs linked to the Middle East conflict, while keeping plans for a new hub in Bahrain on track for June.
Price hikes and flight cuts as immediate response
The low-cost carrier announced that it had increased fares and reduced the number of flights to cushion the impact of rising operating costs. According to the company, around 10% of services were to be cancelled, mainly on routes that could no longer support higher oil prices economically.
The reductions focused on connections where margins came under the greatest pressure from energy costs. The airline framed the move as a short-term adjustment to stabilise its finances under the new fuel price environment.
Tony Fernandes: “Unavoidable”
Company founder Tony Fernandes said a fare increase was necessary as fuel prices climbed.
“A rise in airfares was unavoidable when fuel costs increased significantly.”
said Tony Fernandes, founder.
He added that the cuts chiefly affected routes where returns had been eroded too sharply by the surge in energy expenses. The carrier signalled it would keep reassessing its network as long as fuel remained volatile.
Background: Conflict and oil market impact
Since clashes involving the United States, Israel and Iran at the end of February, airlines worldwide reported higher energy prices and mounting cost pressure. The article cited a sudden jump in oil prices in connection with the closure of the Strait of Hormuz, which strained global oil supplies.
This disruption intensified concerns over fuel availability and pricing for carriers dependent on long-haul operations. AirAsia X positioned its latest measures as part of a broader industry trend driven by geopolitical tensions.
Strategy: Focusing the network on profitable routes
Chief Commercial Officer Amanda Woo said the airline was reallocating capacity across a network of more than 150 destinations in 25 countries that could still be operated profitably.
“We are distributing capacity across a network of more than 150 destinations in 25 countries that can continue to be run profitably.”
said Amanda Woo, Chief Commercial Officer.
She stated the goal was to prioritise routes where revenue could still cover additional fuel and surcharge costs. The company aimed to preserve core markets while trimming services that no longer met profitability thresholds.
Relief for passengers on ancillary charges
Alongside higher fares, AirAsia X also adjusted other charges in an effort not to overburden travellers, according to Woo. The airline planned to reduce fees for checked baggage to help support demand.
By lowering selected ancillary costs, the carrier sought to balance the overall impact of price increases on passengers. Management presented this as a way to retain price-sensitive customers despite headline fare hikes.
Despite crises: Bahrain hub remains on schedule
Although the company said it had only recently completed its recovery from the Covid-19 crisis, it stuck to its expansion plans. The opening of a new hub in Bahrain and the expansion of routes outside Southeast Asia were still scheduled for June.
AirAsia X framed the new Middle East hub as part of a longer-term growth strategy beyond the immediate fuel shock. The airline indicated it would proceed with its timetable unless conditions deteriorated significantly.
Financial position and outlook to 2026
Last year, the carrier reported a profit of 1.96 billion ringgit, underlining its recent post-pandemic recovery. Independent chairman Jamaludin Ibrahim described the latest crisis as a direct challenge to costs and profitability.
“The new crisis is a direct challenge to costs and profitability, but it will remain manageable through 2026, provided it does not last too long.”
said Jamaludin Ibrahim, independent chairman.
He suggested that the airline could cope with the current shock over the medium term if geopolitical tensions eased in time. The board’s assessment pointed to cautious confidence, tempered by uncertainty over the duration of the fuel price surge.