Malaysia Airlines will make passengers on its international flights pay a fuel levy from June 1 to offset rising oil prices, the government said yesterday after the plan won cabinet approval.

Transport Minister Chan Kong Choy said airfares for the national carrier's domestic services would not be affected, with the government absorbing the cost.

The levy meant passengers would have to fork out an extra RM100 ringgit each for return tickets to Europe, North and South America, South Africa, the Middle East, Australia and New Zealand, Chan said.

For regional flights to destinations including China, Japan, Hong Kong and India, the surcharge would be RM30, he was quoted as saying by Bernama news agency.

Chan stressed the surcharge would only be a temporary measure and the cabinet had decided it would be scrapped if fuel prices fall to their March level of about US$37.72 a barrel and stayed there for 30 days consecutively.

But he noted that oil prices, which breached US$40 a barrel in April, were expected to rise further to about US$51per barrel in June.

Surge in profit

Malaysia Airlines is expected to collect US$62.1 million each quarter from the fuel levy but this was insufficient to offset an estimated additional cost of about RM150 million each quarter or RM600 million ringgit a year it had to bear due to strong fuel prices, he said.

Chan said no-frills carrier AirAsia had not yet requested a surcharge.

This is the first time the national airline, which hedged 20 percent of its fuel requirement this year, is imposing a fuel surcharge.

The carrier on Monday reported a 37 percent year-on-year surge in net profit for the year to March, marking its second straight year of profit after a five-year run of losses.

But it has voiced cautious optimism over its prospects this year given pressure on its operating costs due to volatility in oil prices and tensions in the Middle East. - AFP