KUALA LUMPUR, April 5 — Malaysia Aviation Group (MAG) is strengthening its resilience against fuel price volatility through a structured hedging strategy to counter rising costs, while maintaining a steady expansion trajectory with particular focus on lucrative China and other key Asian markets.
Its newly appointed president and group chief executive officer (CEO), Captain Nasaruddin A Bakar, said the airline group is navigating a challenging operating environment marked by rising fuel prices and geopolitical uncertainties, which have significantly increased cost pressures across the aviation industry.
Despite these challenges, he said MAG has secured sufficient fuel supply through a combination of long-term contracts with suppliers and operational adjustments to ensure continuity.
He said the ongoing West Asian conflict, which is causing volatility in fuel prices and foreign exchange rates (forex), has significantly impacted the profitability of the airline industry, raising fuel costs by RM51 million, with a RM203 million negative impact on profit and loss (P&L) due to forex.
Fuel costs surge amid geopolitical tensions
He said fuel costs, which typically account for about 40 per cent of MAG’s total operating expenses, have risen sharply amid the ongoing crisis, now contributing approximately 50 per cent of overall costs.
“The increase in fuel prices has been significant, especially with disruptions affecting global supply. This has pushed our fuel cost component higher than normal levels,” he told Bernama in an exclusive interview recently.
Nasaruddin said around 20 per cent of global fuel supply has been impacted by the crisis, creating additional strain on airlines worldwide.
As for MAG, “in certain locations where supply is constrained, we are carrying additional fuel from other stations to maintain operations. It requires careful planning, but we are able to manage it,” he said.
Quarterly hedging strategy to cushion volatility
Nasaruddin, who took over the helm of the airline group in February 2026, said MAG has adopted a quarterly fuel hedging approach, allowing the group to balance cost stability with market flexibility.
The group has hedged approximately 36 per cent of its fuel requirements for the first quarter, increasing coverage to 50 per cent in the second quarter, before tapering to 40 per cent in the third quarter and 25 per cent in the fourth quarter.
“This approach allows us to manage volatility more effectively while still benefiting from potential price movements,” he said.
He also noted that hedging remains a key component of MAG’s financial strategy, particularly in an environment where fuel prices could shift rapidly due to external factors.
Beyond hedging, MAG is also focusing on strengthening its revenue streams to offset higher operating costs.
He said the national carrier continues to employ dynamic pricing strategies, adjusting fares in response to market demand and competitive conditions to maintain yield.
“Our pricing has to remain competitive. We cannot price too high, and at the same time, we cannot go too low. It is about striking the right balance to sustain our revenue,” he said.
In addition, the airline is enhancing ancillary revenue by offering value-added services such as seat upgrades and other in-flight products to improve overall route profitability.
“The objective is to ensure that each flight remains financially viable despite the increase in costs,” he said.
China and India drive growth strategy
Looking ahead, Nasaruddin said MAG is maintaining its long-term growth strategy through 2030, with a clear focus on expanding its footprint in Asia, particularly in China and India.
He said China will be a key priority market over the next one to two years, supported by strong travel demand and increasing connectivity opportunities.
“We are currently operating nine destinations in China and about 10 in India. These markets continue to show strong and stable demand, and we see significant potential for further growth,” he said.
The group is also looking into opportunities to introduce new routes in the coming months as part of its broader network expansion plan.
On Friday, MAG’s subsidiary, Malaysia Airlines Bhd, expanded its network with the launch of new routes to Shenzhen and Changsha, China, while resuming flights to Fukuoka in Japan, starting from July this year.
MAG continues to see robust passenger demand across most of its network, with load factors consistently hovering in the high 80 per cent range, close to 90 per cent.
Strong traffic flows have been observed from Australia and New Zealand, Australasia, Europe, as well as South Asia, including India.
However, Nasaruddin cautioned that demand could soften if geopolitical tensions persist or escalate further.
“If the conflict prolongs, there is a possibility of softening, particularly in long-haul travel. But at this point, demand remains stable,” he said.
He stressed that the group remains agile in its operations, reviewing flight schedules and capacity on a daily basis to respond to evolving conditions.
Long-term investments remain intact
Despite near-term uncertainties, MAG said the group will continue investing in digital transformation, product enhancements, and workforce development to strengthen its competitive position.
“Our focus is not only on managing short-term challenges but also ensuring that we stay on track with our long-term plans. We will continue to invest in our digital capabilities, our people, and our products,” Nasaruddin said.
He added that while external risks such as fuel volatility and geopolitical developments remain beyond the group’s control, MAG’s strategy is centred on adaptability and disciplined execution.
“In this environment, it is about managing both the short term and the long term simultaneously. We remain confident in our strategy and ability to navigate these challenges,” he said.
The group also plans to expand its mainline fleet to 116 aircraft, serving 106 destinations by 2035.
MAG’s first-phase fleet modernisation will be completed by 2028, with a total of 25 Boeing 737-800s and 20 A330neos.
Notwithstanding this, the final 20 A330neos orders will be delivered between 2029 and 2030.
