Jet fuel surge adds RM7.5bil to MAG costs, Malaysia Airlines fares rise 30pct
KUALA LUMPUR: Malaysia Aviation Group (MAG) is facing up to RM7.5 billion in additional costs following a surge in jet fuel prices after the outbreak of conflict in the Middel East in late February.
MAG group president and chief executive officer Captain Nasaruddin A Bakar said every US$1 increase in oil prices affects the group's financial performance by about RM50 million.
Jet fuel prices, which were below US$100 a barrel in the first two months of 2026, surged to about US$227 after the conflict began on Feb 28.
He said MAG was profitable in the first two months of the year before the sharp increase in fuel prices put significant pressure on operating costs.
"During the first two months, we recorded a profit. However, after the war began, fuel prices more than doubled.
"For Malaysia Airlines' scale of operations, every US$1 increase in jet fuel prices affects our financial performance by about RM50 million," he said in an exclusive interview with Berita Harian.
Based on the increase from below US$100 to about US$227 a barrel, Nasaruddin estimated the additional cost impact on MAG could reach RM7.5 billion.
He said the cost pressure was expected to weigh on MAG's financial performance in 2026, despite group revenue rising about 19 per cent from a year earlier.
"Our revenue is higher than last year, by about 19%. However, costs have increased at a faster pace than revenue," he said.
Flights Cut To Contain Costs
To manage rising costs, Malaysia Airlines has reduced flights on routes that are no longer profitable.
Nasaruddin said the cuts account for about 5% of total flights, or around 8,000 flights this year.
"We are reducing unprofitable routes and managing costs as much as possible.
"We have also stopped non-essential spending. Besides reducing flights, MAG is using measures such as fuel surcharges and fuel hedging to reduce the impact of oil price volatility," he said.
However, he said the measures had yet to fully offset the increase in fuel costs.
"Whatever we are doing now is still not enough to fully absorb the increase in fuel prices. Costs remain higher," he said.
Malaysia Airlines Fares Rise 30pct
The cost pressures have also contributed to an overall increase of about 30 per cent in Malaysia Airlines' ticket prices for both domestic and international flights.
Nasaruddin said fares were not determined by fuel costs alone, as they also depended on dynamic pricing based on supply and demand.
He said fares could rise when demand was strong, while higher fuel costs could require airlines to impose surcharges to recover part of the additional expenses.
Markets recording stronger demand and higher fares include Europe, particularly London, as well as Australia, New Zealand and India.
However, he said Malaysia Airlines would continue to support travel between Peninsular Malaysia, Sabah and Sarawak by maintaining certain fare limits.
Fares Could Stabilise
Nasaruddin said fares could stabilise if oil prices decline after the conflict ends, although the timing of any recovery remained difficult to predict.
"Oil prices move in cycles. Before the war, they were below US$100 a barrel. Now they are around US$160 to US$165.
"If the conflict ends, we expect some stability," he said.
MAG's cost pressures mirror a wider airline industry squeeze as surging jet fuel prices force carriers to raise fares, impose fuel surcharges and trim capacity.
Singapore Airlines, Scoot, Cathay Pacific, Thai Airways, AirAsia X and Cebu Pacific reportedly have all taken pricing measures, while some airlines have also cut flights to contain costs.
Cathay Pacific reportedly raised fuel surcharges by 34 per cent from April and Thai Airways lifted fares by 10-15 per cent.
Budget carrier AirAsia X also adjusted fares, while Cebu Pacific raised fares by 20-26 per cent for several months to offset higher fuel costs.
The fuel shock is also prompting airlines to cut capacity.
AirAsia planned to reduce seat capacity by up to 25 per cent, while Ryanair cut its passenger forecast and winter capacity as fuel costs remain elevated.
