Malaysia Airlines will raise domestic fuel surcharges by up to 42 percent from August 1, Chief Executive Idris Jala said on Monday.
Malaysian, which has said it expects net losses of MYR620 million ringgit (USD$169.2 million) this year, is shedding staff and unprofitable routes as part of a plan to return to profit next year.
Jala also announced the airline's first increase in fares in 14 years for flights between the Malaysian peninsula and its two eastern states on the island of Borneo, and said it would levy a new administration fee of 14 ringgit on all flights.
"On the first (August), we will take full accountability on the profit-loss statement on the local business," Jala told a news conference. "That will hopefully put us in the position to not lose money this year on our domestic routes business."
The government-controlled airline expects an overhaul of its domestic routes, which involves offloading excess planes and scrapping an obligation to fly all local routes, to help it boost profitability.
The overhaul, announced in March, allows Malaysia Airlines to focus on the 19 busiest domestic routes, while low-cost rival AirAsia will fly the same 19 routes and 99 others, many of which are only viable for a budget carrier.
Malaysia Airlines currently flies domestic routes for its state parent firm, Penerbangan Malaysia, for an operating fee -- an arrangement that shielded the airline from any losses but offered only limited potential profits.
Now, it has the opportunity to turn a profit from its domestic operations, by focusing on trunk routes in and out of the capital, and unencumbered by an obligation to fly between smaller towns in the country's more remote regions, such as Malaysian Borneo.
The airline will raise its fuel surcharge by 33 percent for flights within peninsula Malaysia and within east Malaysia, and by 42 percent for flights between the peninsula and the eastern states.
Still, the fuel surcharge will only cover about half its domestic fuel costs, with the airline subsidizing the rest, Jala added.
Fares on domestic economy flights would rise by a weighted average of 15 percent, with business class fares rising up to 25 percent, effective August 15, he said.
