Malaysia Airlines has announced increases in domestic air ticket prices and fuel surcharges as part of plans to turn around the ailing national carrier.

Domestic fares from August 15 will rise by an average 15 percent for economy class tickets and an average 25 percent for business class fares, managing director Idris Jala said.

"This is the first time in 14 years that we have increased the fares," he told reporters yesterday, citing pressures such as increasing fuel costs.

Jala said the carrier was still charging less per mile of travel compared to other countries.

"If you look at the actual fare structure on the 15th of August, you will find that we have actually reduced some of the fares," he said.

Effective from Tuesday, fuel surcharges for domestic routes will also be increased from RM15 to RM20 ringgit (US$5.47) for flights within peninsular Malaysia and within Borneo island in east Malaysia.

Fuel surcharges will rise from RM36 to RM51 for flights between the peninsula and Borneo island.

"The cost for flying one passenger, just for the fuel, is actually RM95 (between east and peninsular Malaysia). Even when we have increased the fuel surcharge from RM36 to RM51, no way we're recovering the full cost of flying the passenger," Jala said.

Under a new aviation policy effective Tuesday, Malaysia Airlines will hand over 99 of its domestic routes, many loss-making, to budget carrier AirAsia.

Routes trimmed

The national carrier will then operate 22 domestic services as part of a restructuring, in addition to its international routes.

The changes are part of a three-year plan to revive the airline's fortunes after it posted a RM1.3 billion loss for the 2005 financial year.

The airline has trimmed a number of international routes to cut costs and has said it will sack 6,000 employees over the next two years as part of its revamp.

Malaysia Airlines has blamed its losses on crippling fuel prices and lower load factors but hopes to be back in the black by 2007 and to achieve record profitability the year after.

"As far as we're concerned we should be in a position not to lose any money this year. We are planning to make sure that we are on a break-even hill this year, from August until December," Jala said.