KUALA LUMPUR, Apr 2 — Tensions in the Middle East have driven up fuel costs, extended flight times and disrupted routes for Malaysian Aviation Group (MAG), underscoring the challenges facing airlines despite strong demand growth across the Asia-Pacific (Apac) region.
President and group chief executive officer Captain Nasaruddin A Bakar said the aviation industry continues to see strong expansion, particularly in the Apac region, where both passenger and cargo traffic are growing at a rapid pace.
“This industry is one of the fastest growing industries, especially in the Apac region, where we see high growth year on year in both passenger and cargo traffic,” he said.
However, he noted that profitability remains extremely thin despite this growth.
“Even with this growth, margins remain very minimal, averaging about 1.4 per cent,” Nasaruddin told a media briefing here today.
Nasaruddin said recent geopolitical developments have sharply increased fuel prices, which remain one of the group’s biggest cost drivers.
“In the last one month, fuel prices have increased significantly, to about US$100 (RM403.56),” he said, adding that the impact on MAG is substantial.
“For our scale of business, every US$1 (RM4.03) increase in fuel has an impact of approximately RM50 million on our bottom line.”
He also noted that currency movements are adding to cost pressures, with changes in the ringgit against the US dollar affecting financial performance.
“Every 10 sen movement in the ringgit against the US dollar can impact our bottom line by about RM200 million,” he said.
Explaining further, he said airspace disruptions linked to the Middle East conflict have forced longer flight routes, particularly for services between Malaysia and Europe.
“For flights to London and Paris, routing has increased by about one hour, which adds approximately 18,000kg of fuel burn daily and about RM115,000 in additional costs per day,” Nasaruddin said.
Operations in the Middle East have also been affected, with certain routes temporarily suspended.
“Flights to Doha have been suspended until around mid-April due to airspace closures, which has impacted our top line revenue,” he said.
However, he said services to Jeddah and Medina, which were briefly disrupted at the start of the conflict, have since resumed.
Beyond fuel costs and routing, Nasaruddin said fuel supply risks are also emerging in some markets.
“We are seeing concerns in certain countries about fuel supply,” he said, adding that Malaysia remains stable for now but caution is required.
In response, the group is focusing on improving operational efficiency and fuel management.
“We are optimising our fleet to prioritise newer and more efficient aircraft to manage fuel consumption,” he said.
Nasaruddin also noted that rising insurance costs are another consequence of the geopolitical environment.
“Insurance coverage costs are also increasing,” he said.
Despite the challenges, he said the group has implemented several measures to ensure continuity of operations while maintaining its long-term strategy.
“First and foremost, we must protect our passengers, our people and our assets. Safety is our priority,” he said.
He added that the group is managing demands carefully to support revenue and cash preservation.
“We are maximising yield, growing sectors based on demand, and adjusting our network accordingly,” he said.
Nasaruddin said the group is also focusing on strengthening revenue streams beyond passenger traffic.
“We are driving ancillary revenue and strengthening partnerships with airlines such as Qatar Airways, American Airlines and British Airways through our Oneworld partnerships,” he said.
The group has also increased investment in digitalisation and workforce readiness.
“Our investment in digitalisation and our people continues, even in the last month,” he said.
Fuel hedging is also part of the group’s strategy to manage volatility.
“For 2026, we have hedged about 36 per cent of our fuel needs, and about 50 per cent for the second quarter,” he said.
Nasaruddin said the group is also seeing increased demand from stranded passengers amid the disruptions.
“We are seeing more new customers flying with Malaysia Airlines due to stranded passengers across the network,” he said.
Looking ahead, he said the group will continue to navigate uncertainty while focusing on resilience and execution under its long-term business plan.
