AirAsia X is adjusting capacity, tightening costs, and adjusting fares to mitigate rising fuel prices, said the airline’s co-founder and adviser, Tony Fernandes.

Fernandes, who is also the CEO of digital travel and lifestyle services group Capital A, said the low-cost carrier will trim capacity and raise fares to cushion the impact of higher fuel costs stemming from the West Asia crisis.

He noted that such adjustments are...