Malaysia Airlines today said it will levy a special fuel levy on its regional and international routes from June 1 in an effort to offset rising oil prices.

"In response to rapidly escalating global oil prices and in line with industry practice worldwide, Malaysia Airlines will, as of June 1, 2004, introduce a surcharge on all regional and intrnational routes," the national carrier said in a statement.

However, there will be no levy on domestic services, it said.

It added that the levy was specific to the price of jet fuel and would not be permanent.

"When oil prices fall to US$37.72 per barrel and the price is sustained for 30 days, the surcharge will be removed," it said.

"Malaysia Airlines makes this move based on sound commercial logic and necessity and, along with other industry players, hopes the measure will be short-lived."

Passengers will now have to fork out an extra RM50 per sector for travel from Malaysia to Europe, Australia and New Zealand, North and South America, the Middle East and Africa, it said.

For regional flights, the surcharge would be RM15 per sector, it said.

Jump in profit

Transport Minister Chan Kong Choy announced the planned measure last week, noting that oil prices, which breached US$40 a barrel in April, were expected to rise further to about US$51 per barrel in June.

He said the carrier is expected to collect RM62.1 million each quarter from the fuel levy but this was insufficient to offset an estimated additional cost of about RM150 million each quarter it had to bear due to strong fuel prices.

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

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

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