Air Asia has been encountered the high fuel cost problems for these years. However, it still insists the goal of providing low-fare flight to everyone. Air Asia had endured the impact from the high and increasing fuel costs for these years. During March of 2012, Air Asia has decided to scrap the long-haul flights (Hassan, 2012).
This is the result from the late-2000s financial crisis, also known as the Global Financial Crisis, is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s (Pendery, 2009). The other airlines are also encountering the impact from the global economic crisis. Such as the Indian airlines Air India, Jet Airways, and Kingfisher Airlines, are all seeking for the help and incentive from Indian government. Kingfisher had not paid salaries for months, while Jet Airways’ accounts had been frozen after it was failing to pay its taxes (Hassan, 2012). Air Asia's profit had certainly been affected. It fell 47 per cent to RM 564 million last year after average fuel prices rose 36 per cent.
The airline problems in Europe were not only the high fuel prices. The other factor was the drastic drop in demand of flight to Europe (Hassan, 2012). Consumers had cut luxuries and long-haul leisure travel. Hence, the frequency of long-haul flight is not as much as short-haul flight. It was difficult for Air Asia to cover the cost for each long-haul flight.
For addressing this problem, Air Asia has decided to scrap the long-haul flight to Europe. In the other hand, Air Asia has decided to increase the short-haul flights which are more profitable, such as Taipei, Perth, and China (Hassan, 2012)..
The decision made by Air Asia for this problem is decisive and critical to overcome the loss-making long-haul flight problem. Whether this is a right decision is to be discovered since this decision was just being implemented.