KUALA LUMPUR, MALAYSIA: Passengers on AirAsia and AirAsia X flights will no longer have to pay a fuel surcharge for both local and international flights.

AirAsia Bhd group chief executive officer Datuk Seri Tony Fernandes said with the move - effective midnight yesterday - passengers need only pay the fare, airport tax and administrative fee.

AirAsia becomes the first airline in the world to do away with the fuel surcharge for all its flights.

Previously, passengers paid an average of RM47(S$19.7).

Fernandes, however, added that he could not guarantee that the airline would not reimpose the surcharge should world fuel prices skyrocket again.

"I would be crazy to say I'll never impose a fuel surcharge. But we will resist for as long as we can."

The check-in baggage handling fee, however, would remain. "We imposed that (in April) for three reasons " fuel prices, to limit luggage, and to be more environmentally friendly.

The lighter the plane, the less emissions there will be," he said.

Fernandes also announced that beginning today, the airline would be offering 500,000 free seats covering all its destinations.

The booking period is until Sunday, and the travel period is from June 22 to Oct 24 next year.

"There are two ways to deal with a slow economy. You've got to give more value, and you've got to stimulate people to travel. That's what we're doing now," he said.

Asked how the he planned to deal with the impact of the fuel surcharge removal, he replied:

"Higher load factor and newer initiatives to increase our revenue will help cover it. We're keeping our 76% load factor, while adding 20% more seats. We'll also look at other ways of increasing revenue."

Also present at the announcement was Domestic Trade and Consumer Affairs Minister Datuk Shahrir Abdul Samad, who applauded AirAsia's move.

In an immediate reaction, Malaysia Airlines (MAS) senior general manager (sales) Datuk Bernard Francis said MAS had already reduced its fuel surcharge by 50%-73%.

"Our sales surged by 400%. We are looking at reducing the surcharge further to give customers what they want - low fare plus five-star products and services," he said in a statement.

He added that what was special about its promotion was that passengers could travel almost immediately.