KUALA LUMPUR, Malaysia (AP) — Malaysia's long-haul budget carrier AirAsia X said Thursday it would eliminate flights to Europe and India as soaring fuel prices, exorbitant taxes and weakening demand took a toll on its operations.
"These changes will improve operating cost efficiencies and consolidate its network to focus on markets where it can build a leadership position in 2012," the airline said.
AirAsia X will suspend four weekly flights to Mumbai starting Feb. 1; daily flights to New Delhi from March 23; four weekly services to Paris from March 31 and six weekly services to London from April 1.
Chief Executive Azran Osman-Rani said continued high jet fuel prices and weakening demand for air travel due to a depressed economy were a double-whammy for the carrier and made it "economically impossible" for the airline to sustain low fares to Europe.
Oil prices have tripled since AirAsia X launched flights to London in early 2009, and are likely to remain high due to unrest in the Middle East and an Iranian oil embargo, the airline said.
Flights to Europe are also burdened by the implementation of an emissions trading scheme this month and escalating air passenger duty taxes in Britain, Azran said in a statement. Attempts to increase fares have led to demand falling adversely.
In India, Azran said visa restrictions for travel between India and Malaysia, and a sharp spike in airport and handling charges made it tough for the airline to operate. Airport and handling costs in India are already more expensive than even Australia and are expected to rise by 280 percent from April, the statement said.
"We intend to concentrate capacity in our core markets of Australasia, China, Taiwan, Japan, and Korea where we have built up stable, profitable routes ... we intend to open up new routes within these markets, as well as add frequencies on existing routes," Azran said.
Under European regulations that took effect this month, airlines flying in and out of Europe must get certificates to pay for the carbon dioxide emissions produced by their flights. They will get free credits to cover most flights this year but must buy or trade for credits to cover the rest — making flying more expensive.
Azran said AirAsia X is hopeful of reinstating services to India once structural issues are resolved.
The carrier said it would offer full refunds or reroute to other destinations for all affected guests.