KUALA LUMPUR – Malaysian budget airline AirAsia on Wednesday abolished administrative fees on all its flights in a move to reduce fares and bolster sales amid the global slowdown.
AirAsia Chief Executive Tony Fernandes said scrapping the fee creates further savings for passengers as they will now pay only the fare and airport tax. AirAsia removed fuel surcharges in November last year.
The fee ranged from 22.5 ringgit ($6.40) to a maximum of around 43 ringgit per ticket and removing it will cost the airline 400 million ringgit ($113 million) a year.
Mr. Fernandes said the region’s biggest budget carrier is confident it can increase ticket sales and generate income from other sources to offset the loss of revenue.
“It’s been a tough six months for the airline industry but AirAsia is getting stronger and stronger. We believe we will increase our load factor and become more competitive,” he told a news conference.
Airlines worldwide are reeling from the global economic slump that has choked passenger and cargo traffic. Many have cut capacity, grounded planes and shed their work force to cope with the downturn.
But AirAsia is expanding and says it is benefiting as travelers cut cost and downgrade to budget carriers. Its net profit in the quarter through March hit a record 203.2 million ringgit, up 26% from a year earlier.