National carrier Malaysia Airlines said today it would scrap fuel surcharges on its domestic flights to boost business in the wake of the economic slowdown.

The move comes after a steep decline in fuel prices and two months after its rival, Kuala Lumpur-based budget carrier AirAsia, scrapped fuel surcharges on all its flights.

idris jala and malaysia airline "Today's move is in line with the competition, ensuring even more competitive pricing," managing director Idris Jala said in a statement.

For international travel, MAS said it had already reduced fuel surcharges for travel from Malaysia to Korea, Japan, Paris, Hong Kong and Singapore, among other routes.

Idris said that despite recent falls in the oil price, the airline's fuel costs were still higher compared to when surcharges were first introduced in 2004.

"Fuel remains our biggest cost and our fuel bill for FY2008 will be higher than FY2007 as the fuel surcharge only covers about 30 percent of the fuel cost," he said.

Airlines used jet fuel, currently priced at US$60.60 per barrel compared to crude oil which costs US$40.83 per barrel at present.

- AFP