Malaysia Airlines on Friday raised fuel surcharges on its international flights by up to 80 percent, and warned that fare increases around the world were needed to prevent an industry collapse.
The national flag carrier said it will increase the surcharge by 25 percent on short-haul regional flights and by up to 80 percent on long-haul flights, effective immediately. The fuel surcharge on domestic flights remains unchanged.
The surcharge for a one-way Kuala Lumpur-London flight, for example, has been raised to MYR736 ringgit (USD$225.70) from MYR600, while for one-way Kuala Lumpur-Sydney it has increased to MYR608 from MYR422.
"The revisions were done on a route-by-route basis to ensure we remain competitive," Managing Director Idris Jala said.
"As these adjustments only partially cover the increase of the fuel price, we will continue to monitor this closely for future revisions, depending on fuel price variations," he said.
Oil rose to a new record high near USD$142 a barrel on Friday, extending gains after surging nearly 4 percent in the previous session.
Airlines around the world are feeling the heat from high fuel prices, which account for a big share of their total costs.
Over the last six months, 24 airlines have gone bankrupt. Many other carriers, including Delta, Northwest, United Airlines and Air Canada have reported massive losses.
State-controlled Malaysia Airlines has managed to stay in the black but last month reported a 9.8 percent drop in first-quarter profit due to higher fuel costs.
It posted a profit of MYR120 million (USD$36.9 million) for the three months ended March 31, down from MYR133 million a year earlier.
The airline, which posted two years of losses from 2005, returned to full-year profit in 2007, aided by a business turnaround plan that has seen better yields and cost reduction.
In a separate open letter, Idris warned that with oil prices rising to unprecedented levels, "the prognosis for the industry is really bleak".
He stressed the need for a "drastic change", including higher fares, and also through mergers and acquisitions.
"More airlines are going to be forced out of business while the majority of us are going to bleed red ink yet again," he said, adding airlines cannot continue to subsidize passengers.
"The general public everywhere must be prepared to face sharply higher prices for air travel now, or be prepared to stomach even higher prices later when the number of participants become fewer and competition fizzles out in favour of consolidation," he said.
"Put bluntly, if these adjustments don't take place - and quickly - the airline industry will collapse and have a ripple effect throughout the entire world economy."
