AirAsia says fares to drop once fuel prices stabilise, eyes one billion passengers by end of 2027

KUALA LUMPUR, June 22 — AirAsia Group has said it will reduce airfares once fuel prices drop and stabilise as tensions begin easing in the Middle East.

AirAsia Group chief executive officer Bo Lingam said the budget carrier lowered its fares by five per cent on June 15, leading to higher bookings over the weekend.

Bo also appeared buoyant about the trend, noting that demand for transfer flights would also rise during the summer holidays, especially once Middle East-based carriers resume operations in full swing.

Bo said AirAsia lost over RM150 million in the first quarter of this year, largely due to the sudden airfare hikes that began on March 4 after the war broke out in the Middle East.

However, he said AirAsia Group clocked a load factor of 83 per cent between January and May despite soaring fuel prices and the resulting financial losses.

Bo said the group has also restructured its flight operations based on shifting demand and cost-effectiveness over the last three months.

With flights to Bahrain and London taking off in August, Bo said AirAsia would edge closer to meeting its goal of connecting one billion passengers in Southeast Asia by the end of 2027.

Commenting on the cancellation of the Jakarta-Singapore route, Bo said the airport tax levied at Changi Airport in Singapore, which costs more than the airfare itself, has rendered the route unsustainable.

However, he floated the possibility of reinstating the Jakarta-Thailand route, while raising concerns about operational costs after a recent hike in airport tax in Thailand.

On a related development, Bo said AirAsia is also phasing out 12 ageing aircraft due to high fuel demand and rising maintenance costs, and is in the process of acquiring Airbus A321LR aircraft.

“We will be receiving two of the aircrafts this year and seven more next year,” he added.