AirAsia X to keep lowering fares as jet fuel prices fall, CEO says

AirAsia X has lowered fares by 5% and plans to continue revising prices as jet fuel costs decrease, following a surge in bookings after the US-Iran peace deal.

Malaysian budget carrier AirAsia X has lowered fares by 5% ‌since June 15, with the airline reviewing its pricing week by week and adding back capacity as jet fuel prices drop, the company's CEO, Bo Lingam, said on Monday.

Lingam said the easing of tensions in the Middle East following the signing of an initial U.S.-Iran peace deal had brought welcome relief to the aviation industry, ‌with fuel prices retreating sharply from their March highs. "The industry has been really affected by the hiking of the fuel price. So hopefully everything in ‌the Middle East stays as it is today," Lingam told reporters, adding that he had already seen a surge in bookings over the weekend.

Singapore jet fuel traded at about $112 a barrel on Friday after recent declines due to the peace deal. That was higher than the pre-conflict price of around $80 a barrel but less than half of the March 30 high of $242. "Week by week, ⁠as fuel ​prices go down, we will also be revising ⁠our fares," Lingam said.

AirAsia X was hit hard by the spike in jet fuel prices, posting a first-quarter loss as it cut 10% of flights and lifted fuel surcharges to deal ⁠with rising costs. Budget airlines are among the most affected by rising fuel costs because their price-sensitive customers are likely to cut back on spending or look to cheaper alternatives ​like rail or bus travel when inflation is high, analysts say.

Lingam said some routes had to be suspended entirely as high fuel costs made ⁠them unviable even at full capacity. The airline used the past three months to cut underperforming flights, shift demand and renegotiate contracts with all vendors and lessors, Lingam said. The contract restructuring and renegotiation ⁠process ​is ongoing, he added.

AirAsia X said on Monday it expected its capacity to be fully restored by August, though Lingam noted that loss-making routes with no demand would not be reinstated. Lingam said the airline was also streamlining its fleet, returning around 12 older aircraft aged 16 to 17 years this ⁠year as more fuel-efficient jets come online.

AirAsia X is set to receive seven Airbus A321LR jets next year, which he said would be deployed on ⁠medium-haul routes, including to China. Lingam also said the ⁠airline expected to receive its first Airbus A220 jets by the end of 2027, which would be deployed in the Philippines.

AirAsia X last month announced a firm order for 150 of the A220 jets manufactured in Canada, with 150 ‌options to purchase a larger ‌version of the jet if Airbus makes it.