Malaysia Airlines may impose a passenger fuel levy to offset the impact of rising oil prices on its operating margins, a report said today.

Chief financial officer Low Chee Teng told the Star newspaper that the national carrier was "seriously considering" imposing a fuel surcharge for passengers, which could be introduced as early as this week.

This followed its announcement Tuesday that it would raise cargo freight rates from next week by one-third for Europe and the United States, and by 63 percent for Asia, the newspaper said.

If introduced, Low said the fuel surcharge would be the first for Malaysia Airlines and may be incorporated into a market fare pricing scheme, which means most major airlines operating out of Malaysia could also be obliged to impose the levy.

He said Malaysia Airlines has hedged about 15 percent of its fuel requirements but this could be increased to up to 50 percent.

Domestic rival, budget carrier AirAsia, said it did not intend to raise fares for now.

AirAsia says no

A company spokesman told the daily that AirAsia could still maintain its low fares because it had hedged its fuel requirements for the next two years, without giving details.

But its unit in Thailand has expressed concern that its 10 percent gross margin would be cut if fuel costs did not fall by the third quarter. AirAsia started in 2001 in the Malaysian market but has rapidly expanded regionally in recent months to Thailand, Singapore and Indonesia.

The price of jet fuel, which makes-up about a fifth of an airline's operating costs, has been rising due to hot demand and supply fears amid high Middle East tensions. Crude oil prices have surged past 40 dollars a barrel to the highest level since October 1990.

Several airlines, including Australia's Qantas, have introduced a fuel surcharge on the cost of a ticket. -AFP