AirAsia X to stop NZ flights, cites fuel costs

SINGAPORE Mon Mar 12, 2012 6:50am EDT

AirAsia staff greet passengers arriving from Kota Kinabalu to the Low Cost Carrier Terminal in Sepang outside Kuala Lumpur December 8, 2011. REUTERS/Bazuki Muhammad

AirAsia staff greet passengers arriving from Kota Kinabalu to the Low Cost Carrier Terminal in Sepang outside Kuala Lumpur December 8, 2011.

Credit: Reuters/Bazuki Muhammad

SINGAPORE (Reuters) - AirAsia X will suspend flights to and from New Zealand at the end of May as high jet fuel prices have made the service unprofitable, the long-haul affiliate of Malaysian budget carrier AirAsia Bhd said on Monday.

AirAsia Bhd (AIRA.KL) is Asia's largest budget carrier.

"The Christchurch route has been impacted by the spiralling cost of jet fuel," AirAsia X chief executive Azran Osman-Rani said in a statement. "Since the launch of the route, jet fuel prices have increased in excess of 30 percent, and are currently still at very high levels."

Airlines have been struggling to pass on the higher cost of fuel to customers as demand for business and leisure travel dwindles amid a slowing global economy.

In December, the International Air Transport Association (IATA) cut its forecast for airline industry profits by a quarter to $3.5 billion for 2012 and warned the industry could plunge to an $8.3 billion loss if Europe's debt problems trigger another banking crisis.

AirAsia X has stopped flying between Kuala Lumpur and Mumbai and plans to discontinue services to London, Paris and New Delhi as part of a plan to focus on nearer destinations in Australia and East Asia.

(Reporting by Kevin Lim; Editing by John O'Callaghan)